What Major Revisions and a Blowout Month Tell Us About the Jobs Market

What Major Revisions and a Blowout Month Tell Us About the Jobs Market By Vicky Ge Huang

The U.S. economy added 130,000 jobs in January, its strongest growth in over a year, and a sign that the labor market may be shaking off its recent stagnation. January's robust gains surprised forecasters, blowing far past consensus expectations. The report is likely to cement the Federal Reserve's wait-and-see posture, making it difficult for officials to build a case for further rate cuts based on labor-market weakness. While the January numbers exceeded expectations, the government dramatically lowered its estimates for how many jobs the economy generated over the past two years.

Top News Jobs Market: What Sweeping Revisions and a Blowout Month Tell Us

The American workforce is increasingly donning scrubs.

January's strong jobs report, and sweeping revisions that slashed jobs numbers for the past two years, show how much the U.S. labor market is transforming. The mixed jobs picture reflects surging demand for people in healthcare and social services but a bleaker environment for government employees, factory workers and cubicle dwellers. Here are some big takeaways .

Healthcare Work Propels U.S. to Strongest Job Growth in More Than a Year

Jobs Data Point to a Longer Fed Hold on Rates

Job Growth Last Year Was Far Worse Than We Thought. Here's Why.

Factory Job Losses Have Been Worse Than We Thought

Fed's Schmid Pushes Back on Rate-Cut Prospects

Kansas City Fed President Jeffrey Schmid reaffirmed his resistance to further interest-rate cuts, arguing that further Fed easing would risk allowing inflation to remain too high . "In my view, further rate cuts risk allowing high inflation to persist even longer," Schmid said, according to a published text of his remarks.

U.S. Economy Demand for Bonds Is Insatiable. Even Risky Borrowers Are Gaining.

A new AI borrowing frenzy and lingering fears about potential defaults haven't deterred investors hungry for bonds

from U.S. companies, states and cities.

The extra yield-or spread-that investors demand to hold highly rated corporate bonds instead of ultrasafe U.S. Treasurys hit a 27-year low in late January. Spreads on speculative-grade corporate bonds dropped to an 18-year low. In the $4 trillion municipal bond market, the spread between interest rates on triple-A and triple-B bonds is at one of its lowest points in two years. Those tight spreads are the latest sign of how bonds remain stubbornly resistant to concerns rattling other markets.

U.S. Budget Hole Set to Deepen by Trillions

The U.S. budget deficit will remain roughly flat for the next two years

and then widen over the next decade as interest costs consume an increasing share of spending, the Congressional Budget Office said Wednesday in a forecast that highlighted America's long-run fiscal challenges.

Key Developments Around the World GOP-Led House Rejects Trump's Tariffs on Canada

The GOP-led House passed a resolution

Wednesday designed to roll back President Trump's tariffs on Canada, as a half-dozen Republicans joined Democrats in rebuking the administration's signature economic policy.

Trump-Led Trade Deal Review Poses 'Important Risk' to Outlook, Bank of Canada Minutes Say

U.K. Posts Modest Growth for 2025

The U.K. economy recorded another year of tempered economic growth

in 2025 as consumers stayed cautious, unemployment rose and borrowing costs remained high.

U.K. Government Bonds Enter Period of Political Risk

Sanctions, Ship Seizures, Low Prices Squeeze Russia's Oil Industry

Dozens of tankers filled with Russian oil are floating at sea without buyers. Western powers are seizing the aging ships the country relies upon. Buyers of Russian oil are demanding the steepest discount

to global oil prices since the early months of the war in Ukraine.

IEA: Oil Supply to Rebound After U.S. Winter Storm Slashed Output

The International Energy Agency expects global oil supply to rebound

in the coming months after plunging in January due to a severe winter storm in the U.S. and export constraints that curtailed flows from Kazakhstan, Russia and Venezuela.

Financial Regulation Crypto Lender BlockFills Suspends Client Withdrawals

BlockFills, a crypto lending and trading firm for institutional investors, has suspended customer withdrawals

in light of the recent crypto plunge.

Forward Guidance Thursday (all times ET)

8:30 a.m.: Unemployment Insurance Weekly Claims Report - Initial Claims

10 a.m.: Existing Home Sales

10 a.m.: U.S. SEC Chair Paul Atkins testifies to Senate Banking Committee

7 p.m.: Federal Reserve Governor Stephen Miran and FRB Dallas President Lorie Logan speak at Global Perspectives event

Friday

8:30 a.m.: CPI

8:30 a.m.: Real Earnings

6 p.m.: Deadline for passage of new funding bill for U.S. Department of Homeland Security

About Us

WSJ Pro Central Banking brings you central banking news, analysis and insights from WSJ's global team of reporters and editors. This newsletter was compiled by markets reporter Vicky Ge Huang in New York. Send your tips, suggestions and feedback to [[e-mail]].

This article is a text version of a Wall Street Journal newsletter published earlier today.

(END) Dow Jones Newswires

02-12-26 0721ET