US Nonfarm Payrolls Crush Expectations: 312K Jobs Added in January
The US labor market roared back with its strongest monthly gain in over a year, complicating the case for further Fed rate cuts and sending Treasury yields higher.
Marcus Chen
Macro Strategist
The US economy added 312,000 jobs in January, smashing economists' expectations for 185,000 and marking the strongest monthly gain since November 2024. The unemployment rate held steady at 4.0%.
Wage growth also surprised to the upside, with average hourly earnings rising 0.5% month-over-month and 4.3% year-over-year, above the 0.3% and 4.0% consensus estimates, respectively.
Sector breakdown:
- Healthcare: +82,000
- Government: +55,000
- Professional & business services: +48,000
- Leisure & hospitality: +42,000
- Construction: +38,000
- Technology: +28,000
The blowout report immediately repriced rate cut expectations, with fed funds futures now pricing in zero cuts for 2026 H1, compared to one cut priced in before the release. The 2-year Treasury yield surged 12bps to 4.24%, while the 10-year jumped 8bps to 4.82%.
The dollar strengthened broadly, with the DXY index rising 0.8% to 108.4 — its highest level since early December. US equity futures initially dipped on the "good news is bad news" dynamic but recovered to trade roughly flat by mid-morning.
"This is a labor market that doesn't need help from the Fed," said Marcus Chen, macro strategist at TMQ Research. "The data argues for an extended pause, and potentially removes rate cuts from the 2026 playbook entirely."