EconoFACTS

February 11, 2026 | 09:12

Healthy Start To Year For U.S. Workers

Economist

Senior Economist and Director
Economics

Sal Guatieri is a Senior Economist and Director at BMO Capital Markets, with over two decades experience as a ma... (Read more)

Sal Guatieri

Senior Economist and Director
Economics

Sal Guatieri is a Senior Economist and Director at BMO Capital Markets, with over two decades experience as a ma... (Read more)

Much of the upside surprise in January payrolls was in one sector, but at least the jobless rate eased. Nonfarm payrolls jumped 130,000 to start the year, about double market expectations, and a decent improvement from the sub-50k prints of the past three months. Moreover, the spike came despite a hefty 42,000 loss of government positions. Private payrolls rose an impressive 172,000; however, one large sector, health care and social assistance, accounted for 124,000 new positions. Excluding this sector, private sector jobs rose 48,000, or close to the perceived break-even rate that should keep the jobless rate stable over time given slower labour force growth.

Revisions in the prior two months were -17,000. Moreover, the benchmark revisions from April 2024 to March 2025 were -898,000, a little less than flagged by the preliminary estimate released last fall but still large. Instead of rising an average of 137,000 each month during this period, nonfarm payrolls grew just 71,000. For all of 2025, payrolls rose just 15,000 on average per month, and would have contracted if not for health care gains averaging 33,000.

The household survey printed over half a million new jobs in January, trimming the unemployment rate a tenth to 4.3%, and further distancing itself from the cycle-high of 4.5% in November. The improvement in job prospects could start to ease some of the anxiety workers have felt about regaining employment after a job loss, thereby supporting consumer confidence.

Aggregate work hours jumped 0.4%, the largest increase since last April. Alongside decent productivity growth, this points to another solid quarter of real GDP growth in Q1 (we currently have penciled in 2.3% a.r.).

Average hourly wages also leaped 0.4%, though the yearly rate remained subdued at 3.7%.

Treasury markets sold off on the stronger than expected jobs report and fed funds futures have priced in less than 10% odds on a March rate cut, down from around 20% prior to the release.

Bottom Line: Healthcare continues to drive the bulk of job creation in the U.S. economy, while most other labour market indicators (e.g., ADP) remain soft. However, the January employment report could mark the start of a gradual recovery amid resilient economic growth.

Table 1 - United States — Employment

(change in thousands)

Source: BMO Economics, Haver Analytics