Labor Market and Economy Report: A Look at Trends in January 2026

Executive Summary

Job Growth

January employment growth exceeded expectations, with nonfarm payrolls increasing by 130,000 jobs, driven primarily by gains in healthcare, social assistance and construction. However, the same employment report included significant downward revisions to 2025 data: following its annual benchmark revision, the BLS now estimates that employment rose by just 181,000 jobs in 2025, far below the previously-estimated 584,000.

Unemployment and Labor Force Participation

The unemployment rate fell to 4.3% in January, and the labor force participation rate slightly increased to 62.5%.

Unemployment rates specific to the industries Aston Carter supports were as follows for January: finance and insurance (1.9%), professional and business services (4.3%), hospitals (1.9%), utilities (2.7%), manufacturing (3.3%) and construction (5.3%).

Among skilled labor categories Aston Carter sources talent for, unemployment in business and financial was 3.3%, and office and administrative was 4.0%.

Inflation

The year-over-year inflation rate increased by 2.4% between January 2025 and January 2026, down from December 2025’s CPI of 2.7%.

Wage Growth

Average hourly earnings increased by 3.7% for the 12 months ending January. “Real” average hourly earnings (wages adjusted for inflation) increased by 1.2% between January 2025 and January 2026. In other words, average hourly earnings are keeping up with inflation, but consumers may still be feeling the pressure of higher prices.