Actalent Labor Market and Economy Report: A Look at Trends in January 2025

Executive Summary

Job Growth

The U.S. economy added 143,000 jobs in January, falling short of economists’ expectations of 170,000-175,000 jobs. Still, the unemployment rate declined to 4.0%, and the last two months’ employment gains were revised upward by a total of 100,000, indicating that the labor market remains relatively stable. Notable gains occurred in healthcare (+43,700), retail trade (+34,300), government (+32,000) and social assistance (+22,300).

Other industries Actalent supports experienced the following job growth and loss last month: aerospace and defense (+0), architecture and engineering (+7,100), automotive (-9,700), construction (+4,000), manufacturing (+3,000), scientific research and development (+600) and utilities (+100).

Unemployment and Labor Force Participation

The unemployment rate decreased slightly from 4.1% to 4.0% between December 2024 and January 2025. The unemployment rate remains historically low compared to the median rate of 5.0% observed over the last 20 years.

The labor force participation rate (LFPR) was 62.6% in January. The LFPR, or the percentage of the population who is working or looking for work, has yet to recover to its pre-pandemic rate of 63.3%. Unemployment rates specific to the industries Actalent supports were as follows for January: hospitals (1.7%), utilities (1.2%), professional and technical services (2.9%), manufacturing (3.6%), and construction (5.4%). Among skilled labor categories Actalent sources talent for, unemployment in software-IT-mathematics was 2.5%; architecture and engineering was 1.5%; and sciences (life, physical and social) was 1.8%.

Inflation

The consumer price index, a measure of inflation, increased by 3.0% for the 12 months ending January, slightly above December's reading of 2.9%. This was the fourth consecutive increase, suggesting that inflation is moving further away from the Federal Reserve’s 2.0% target. High inflation has contributed to higher materials costs and operating costs for many companies. Additionally, high inflation tends to deter the Federal Reserve from making additional interest rate cuts, keeping lending standards tight. The combination of higher-for-longer inflation and interest rates may contribute to slower hiring activity for many companies in the near term.

Wage Growth

Average hourly earnings increased by 4.1% for the 12 months ending January, essentially unchanged from the last three months. Real average hourly earnings increased by 1.0% between January 2024 and January 2025. In other words, despite average hourly earnings increasing by 4.1% year-over-year, workers may only feel as if they’re making about 1.0% more, on average, due to the effects of inflation.