The truth about the jobs report
A closely watched jobs report beat expectations. But the details tell a very different story, with gains almost entirely concentrated in “necessity” sectors
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The latest employment report from the Bureau of Labor Statistics contained an eye-catching surprise, with January delivering stronger-than-expected job gains. But the concentration of jobs growth in health care (+82,000 jobs) and “social assistance” work (+42,000 jobs) continues existing trends that suggest employment gains concentrated in “necessity” sectors, in which demand is less elastic than discretionary.
In all, these necessity fields account for the vast majority of the January jobs growth detailed in the report released Wednesday morning. The remainder came from nonresidential construction, suggesting that the AI buildout continues to bolster the overall construction sector.
Meanwhile, some white-collar fields — like financial services (-22,000) — showed marked declines. Federal government employment (-34,000) also fell.
All this means that headlines suggesting the January jobs report “smashes expectations” are somewhat misleading. In other words, strength in non-discretionary sectors masked weakness elsewhere — portraying narrow net growth rather than broad-based gains.
What’s more, while unemployment remained almost flat on a month-over-month basis, it grew on a year-over-year basis.
“Both the unemployment rate, at 4.3 percent, and the number of unemployed people, at 7.4 million, changed little in January,” the report noted. “These measures are higher than a year earlier, when the jobless rate was 4.0 percent, and the number of unemployed people was 6.9 million.”
Details of the revision
The BLS report also contained details of the revision to 2024-2025 jobs numbers. This scheduled revisions reflects a long-running practice in which the government goes back and checks earlier data against more complete records. Monthly reports are estimates. The more complete records that become available later allow officials to consider estimates vs. tax records.
So what does the scheduled revision show? Weaker jobs growth in 2025 than was initially reported — in fact, the slowest rate of job creation in two decades, once you strip out recessions, according to reporting from Yahoo Finance.
“White collar sectors carried the steepest losses last year, including government and professional services, while Health Services, Leisure, Financials, and Construction kept hiring at a steadier pace,” Ger Doyle of the ManpowerGroup said in a statement. “Quits remain flat and layoffs have risen modestly, which reinforces that people are staying in their roles even as companies refine teams.”