Hiring slowed in January as U.S. employers added 143,000 jobs amid the Los Angeles wildfires, frigid weather across much of the nation and uncertainty generated by President Donald Trump’s trade and immigration policies.

But payroll gains for the previous two months were revised up by 100,000, depicting an even more robust picture of the labor market at the end of 2024.

The unemployment rate, which is calculated from a separate survey, fell from 4.1% to 4%, an eight-month low, the Labor Department said Friday.

Economists had estimated that 170,000 jobs were added last month, according to the median estimate of those surveyed by Bloomberg.

But November’s employment gains were revised up from 212,000 to 261,000, and December’s from 256,000 to 307,000, booming additions that partly coincided with a burst of small business optimism after Trump’s election victory in early November.

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Last month’s jobs survey was taken the week of Jan. 12 and reflects the labor market’s performance before Trump took office Jan. 20.

Have the job numbers been revised down?

Separately, total U.S. employment in March 2024 was revised down by 598,000, a historically massive downgrade but far less than the 818,000 decrease the Labor Department initially estimated in August. The change, which is based on state unemployment records that reflect actual payrolls rather than the government’s usual monthly survey, effectively means the nation added an average 50,000 fewer jobs a month from April 2023 to March 2024.

Which industries are adding the most jobs?

Health care, a reliable payroll engine the past couple of years, led January’s job gains with 44,000. Retail added 34,000 and the public sector, 32,000.

But leisure and hospitality, which includes restaurants and bars, lost 3,000 jobs. Professional and business services, a sprawling sector that includes white-collar and other office workers, shed 11,000. Meanwhile, manufacturing added just 3,000 positions and construction 4,000.

How much are wages increasing?

Average hourly earnings rose 17 cents to $35.87, pushing up the yearly increase from 3.9% to 4.1%.  

Wage growth generally has slowed as pandemic-related labor shortages have abated, helping temper inflation. That’s because employers often pass along their higher labor costs to consumers through price increases.

A rule of thumb says annual pay increases need to fall to 3.5% to align with the Federal Reserve’s 2% inflation goal, But recent strong growth in productivity, or output per worker, could allow companies to dole out 4% raises without having to raise prices, economists say.

Will there be another interest rate cut?

Although job growth slowed markedly last month, the tally was still solid, and the falling unemployment rate, large upward revisions for the previous two months and pickup in pay increases probably do little to spur the Fed to lower rates further anytime soon. 

With inflation stuck at elevated levels recently and the economy doing well, the Fed left its key interest rate unchanged at a meeting last week. The central bank slashed the rate by a percentage point late last year as its preferred inflation measure slowed from 5.6% in 2022 to 2.8%, moderately above its 2% goal.

But forecasters say Trump’s tariffs on imports and the deportations of immigrants who lack permanent legal status – a program that would constrain the labor supply and drive up wages – could force the Fed to pause its rate cuts for an extended period.

Austan Goolsbee, president of the Federal Reserve Bank of Chicago and a voting member of the Fed’s rate-setting committee this year, told USA TODAY, “This is another month showing stability.” While job growth slowed, “150,000 (job gains) a month is still a pretty solid month.”

The Fed, he added, has appropriately slowed the pace of its rate cuts as it tries to make sense of multiple cross currents in the economy, including Trump’s policies. But he added that a strong jobs report shouldn’t keep the Fed from resuming rate cuts as long as its preferred inflation measure, now just under 3%, continues to drop.

“I think inflation looks to be on a path to go down to 2%,” Goolsbee said, referring to the Fed’s goal. “If that continues, I think it would be appropriate for rates to fall to something near where they’re going to settle.”

And strong pay increases, he said, also shouldn’t dissuade Fed officials from lowering rates. “Wages tend to lag prices,” he said. “They are not a good indicator for inflation looking forward.” He also said strong productivity growth “means that wages can grow faster than before without generating inflation.”

Goolsbee is generally considered one of the Fed’s more dovish members − or more concerned about high interest rates that may lead to a recession than low rates that could spark inflation.

The Fed has lowered its forecast from four rate decreases in 2025 to just two. Some economists, though, say the central bank will be even more cautious and stay on the sidelines this year.

The Fed lifted the rate to a 23-high in 2022 and 2023 to increase borrowing costs and cool a pandemic-induced inflation spike.

How is the job market in the US right now?

The job market was likely buffeted by several forces last month. Many Los Angeles-area residents were ordered to evacuate their homes after the wildfires began Jan. 7. Although many worked at least part of the following week, when the Labor Department conducted its employment survey, others couldn’t, Goldman Sachs wrote in a note to clients.

As a result, the research firm estimates, the blazes reduced job growth by about 20,000 last month, and cold weather trimmed payrolls by a similar amount, especially in industries such as construction, restaurants and hotels. Last month was the coldest January in the U.S. since 2011, according to AccuWeather.

Are a lot of companies laying off workers?

At the same time, layoffs have remained unusually low. Because employers typically cut lots of workers at the end of the year, dampening January employment totals, the sparse layoffs likely boosted last month’s net job gains after the figures were seasonally adjusted, Goldman said.

More broadly, forecasters say, Trump’s threats to hit imports from Canada, Mexico and China with tariffs are stoking worries that may already be discouraging hiring.

Sixty-seven percent of U.S. executives said they were more stressed heading into 2025 than they were a year earlier, according to an online survey of 1,000 executives late last year by Sentry, a business insurance company.

Forty-seven percent of the company officials said their biggest concern was economic uncertainty.

“Steep tariffs and policy uncertainty could push businesses to increasingly adopt wait-and-see behaviors and pull back on hiring as they navigate higher input costs and retaliatory measures,” Lydia Boussour, senior economist at EY-Parthenon, wrote in a research note.

Although Trump agreed to pause the 25% tariffs on Canada and Mexico, they could still take effect early next month. And Trump has imposed a 10% tariff on all Chinese imports.

Both the import fees and Trump’s plans to deport millions of immigrants who lack permanent legal status – an initiative that already has begun – are likely to reignite inflation and hamper economic growth, economists say.

Trump’s policies – combined with a labor market that’s downshifting after a post-pandemic surge – are likely to slow average monthly job gains to about 100,000 by the end of the year, Moody’s Analytics estimates.

At the same time, Trump’s plans to loosen regulations on businesses and extend and expand his 2017 tax cuts have lifted small business optimism and probably will boost the economy, forecasters say.

(This story was updated to add new information.)