Hiring increased sharply at outset of 2026, blowing past economists’ expectations

(NEW YORK) — Hiring increased sharply at the outset of 2026, the year’s first jobs report said, blowing past economists’ expectations and besting sluggish performance from the previous year.

The U.S. added 130,000 jobs in January, according to the report, which marked a sharp increase from 50,000 jobs added in the previous month.

The unemployment rate dropped to 4.3% in January from 4.4% in December, the Bureau of Labor Statistics (BLS) said. Unemployment remains low by historical standards.

The labor market slowed sharply last year, prompting interest rate cuts at the Federal Reserve and concern among some observers about the nation’s economic prospects.

The BLS provided a significant downward revision for job gains in 2025, meaning hiring came in lower than the agency had previously estimated.

The U.S. added 181,000 jobs last year, which amounts to an average of about 15,000 jobs added per month, the BLS said. That updated estimate stands well below a prior count of 584,000 jobs added last year.

The performance in January registered well above the lackluster hiring of a typical month last year.

The U.S. Bureau of Labor Statistics delayed the release of the January data due to a partial government shutdown last week, which helps explain why the jobs report was issued on a Wednesday in the middle of the month, rather than its customary release on the month’s first Friday.

The jobs report arrived weeks after a series of job cuts that slashed tens of thousands of workers combined at a handful of name-brand companies.

Amazon said last month it planned to cut about 16,000 employees as it seeks to “strengthen” its business by reducing “layers” and “bureaucracy” within its workforce.

A day earlier, UPS announced it plans to cut as many as 30,000 employees this year. Pinterest also unveiled an effort to slash 15% of its staff, according to a securities filing. The company boasts about 4,500 employees worldwide, a securities filing shows.

So far, the cooling labor market has avoided widespread job losses, making the recent flurry of layoffs an outlier, analysts previously told ABC News. The high-profile cuts reflect trends in tech and some other sectors, however, where companies have reversed a pandemic-era hiring blitz and pivoted in response to artificial intelligence.

The Fed slashed interest rates three consecutive times last year in an effort to boost the flagging labor market. In January, the Fed opted to hold interest rates steady, taking a cautious approach due in part to elevated inflation.

The benchmark rate stands at a level between 3.5% and 3.75%. That figure marks a significant drop from a recent peak attained in 2023, but borrowing costs remain well above a 0% rate established at the outset of the COVID-19 pandemic.

Still, Fed Chair Jerome Powell appeared to view the economy in a favorable light, saying it is expanding at a “solid pace” during a Jan. 28 press conference.

“While job gains have remained low, the unemployment rate has shown some signs of stabilization,” Powell added.

Futures markets expect two quarter-point interest rate cuts this year, forecasting the first in June and a second in the fall, according to CME FedWatch Tool, a measure of market sentiment.