U.S. Job Growth Slows, But Labor Market Remains Resilient

U.S. job growth slowed in January, with unemployment at 4.0%. While wage growth remained strong, labor market resilience is driving economic expansion. Despite extreme weather conditions, sectors such as healthcare and retail saw employment gains. The Federal Reserve is expected to hold off on interest rate cuts until June.

The latest employment report from the U.S. Labor Department indicates a slowdown in job growth for January, following substantial gains in previous months. Despite this deceleration, the unemployment rate remained low at 4.0%, which likely gives the Federal Reserve reason to pause interest rate cuts until mid-year.

Wage growth continued robustly, helping to sustain consumer spending and underpinning the broader economic expansion. Healthcare emerged as a strong performer in job creation, adding 44,000 positions, while retail employment also showed gains. Government hiring contributed significantly to increase employment, despite anticipated reductions in federal roles.

Market reactions included a rise in U.S. Treasury yields, with the dollar strengthening against other currencies. Economists remain watchful of potential impacts from policy shifts under the Trump administration, chiefly immigration and spending cuts, which may influence future labor market trends and Federal Reserve policies.

(With inputs from agencies.)