Job creation ebbed in January. Here are the five things we learned from U.S. economic data released during the week ending February 7.
Payrolls growth slowed in January. Nonfarm payrolls increased by a seasonally adjusted 143,000, less than half of the December 2024 Bureau of Labor Statistics data series 307,000 gain. Private-sector employers added a net 111,000 workers, all in the service sector. Health care/social assistance (+66,000) and retail (+34,300) added the most jobs. Government sector payrolls expanded by 32,000. The same report includes the impact of the data series’ annual benchmarking, which lowered the payrolls estimate by more than a half million jobs. January’s average weekly earnings of $1,223.17 were up 3.8 percent from a year earlier.
The household survey finds the unemployment rate slipping 1/10th of a percentage point to 4.0 percent. The labor force participation rate inched up 1/10th of a percentage point to 62.6 percent, with the 25-54 rate also adding 1/10th of a percentage point to 83.5 percent. The median length of unemployment held steady at 10.4 weeks, while the number of part-time workers “for economic reasons” grew by 119,000 to 4.477 million. The broadest measure of labor underutilization—the U-6 series—was unchanged at 7.5 percent.
There were fewer unfilled jobs in December. The Bureau of Labor Statistics reports there were a seasonally adjusted 7.600 million open jobs, down 556,000 for the month and 14.5 percent from a year earlier. Private sector employers sought to fill 6.720 million jobs, including more than a million open positions in professional/business services, health care/social assistance, and leisure/hospitality. Employers hired 5.462 million people, up 89,000 for the month but off 5.6 percent from December 2023. Industries hiring the most workers were professional/business services, accommodation/food services, retail, and health care/social assistance. 5.269 million people separated from their jobs, up by 68,000 in December but down 2.8 percent from a year earlier. This included 3.197 million quitting their job (up 67,000 for the month but down 7.0 percent from a year earlier) and 1.771 million people laid off (-29,000 versus November 2024 and +10.2 percent versus December 2023).
Concerns about inflation depressed consumer sentiment in early February. The University of Michigan’s Index of Consumer Sentiment lost 3.3 points to a seasonally adjusted 67.8 (1966Q1=100), its lowest reading since last summer. The current conditions index fell by 5.3 points to 68.7, while the expectations measure lost 2.0 points to 67.3. All three indices were down by double-digit percentages from a year earlier. The press release noted that “many consumers” were anxious about “high inflation” returning. One-year inflation expectations surged by a full percentage point to +4.3 percent, its highest point since November 2023.
The manufacturing sector expanded for the first time in more than two years in January. The Manufacturing PMI grew 1.7 points to 50.9. This was the first time in 26 months that the Institute for Supply Management measure was above 50.0, indicative of a growing manufacturing sector. Measure for new orders (55.1), production (52.5), and employment (50.3) improved, while that for inventories (45.9) contracted. Eight of 16 tracked manufacturing industries reported growth, led by textiles, primary metals, and petroleum/coal products.
Meanwhile, the Services PMI slipped by 1.2 points in January but remained in expansionary territory at 52.9. Measures for business activity/production (54.5), new orders (51.3), employment (52.3), and inventories (47.5) each declined during the month. Fourteen service sector industries expanded, led by agriculture, accommodation/food services, and mining. The press release noted “many” survey respondents “preparations or concerns related to potential U.S. government tariff actions.”
The trade deficit swelled in December as imports surged before expected tariffs. Exports declined 2.6 percent to a seasonally adjusted $266.5 billion, while imports jumped 3.5 percent to $364.9 billion. The result trade deficit rose 24.7 percent to -$98.4 billion. The Census Bureau and Bureau of Economic Analysis have the trade deficit for all of 2024 at -$918.4 billion, up 17.0 percent from the prior year. The goods deficit increased by $18.9 billion to -$123.0 billion, while the services surplus narrowed by $0.6 billion to +$24.5 billion. The former resulted from declines in exported pharmaceutical preparations, crude oil, capital goods, and automotive vehicles/parts, along with a big increase in imported industrial supplies (including finished metal shapes), consumer goods, and capital goods. The U.S. had its largest goods deficits with China, the European Union, and Mexico.
Other U.S. economic data released over the past week:
- Jobless Claims (Week ending February 1, 2025, First-Time Claims, seasonally adjusted): 219,000, +11,000 vs. the previous week, +6,000 vs. the same week a year earlier). 4-week moving average: 216,750 (+1.6% vs. the same week a year earlier).
- Vehicle Sales (January 2025, Autos and Light Trucks, seasonally adjusted annualized rate): 15.603 million (-7.5% vs. December 2024; +3.8% vs. January 2024).
- Factory Orders (December 2024, New Orders for Manufactured Goods, seasonally adjusted): $578.5 billion (-0.9% vs. November 2024; -0.5% vs. December 2023).
- Wholesale Trade (December 2024, Merchant Wholesalers’ Inventories, seasonally adjusted): $898.5 billion (-0.5% vs. November 2024; -0.1% vs. December 2023).
- Productivity (2024Q4-preliminary, Nonfarm Business Labor Productivity, seasonally adjusted annualized rate): +1.2% vs. 2024Q3; +1.6% vs. 2023Q4).
- Consumer Credit (December 2024, Outstanding Consumer Credit Balances (Net of Mortgages and Other Real Estate Loans, seasonally adjusted): $5.146 trillion (+$40.8 billion vs. November 2024; +2.4% vs. December 2023).
- Mortgage Delinquencies (2024Q4, Delinquency Rate for Mortgage Loans on One-to-Four Unit Residential Properties, seasonally adjusted): 3.98% (up 6 basis points vs. 2024Q3; up 10 basis points vs. 2023Q4).
- Bankruptcy Filings (12-Month Period Through December 31, 2024, Business and Non-Business Filings): 517,308 (+14.2% vs. 12-month period through December 31, 2023).
- Senior Loan Officer Survey
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What We Learned About the U.S. Economy Last Week 