On Wednesday, we received the January jobs number (that was slightly delayed due to yet another government shut down).

Per that report, the US economy added 130,000 jobs in January. This headline number was above analyst expectations, which was all the more surprising given a few soft data releases in recent weeks that had many bracing for a number well below the expected 75,000.

The report was upbeat – and rather broad based, with better than expected numbers on both average hourly earnings and the participation rate. The unemployment rate fell to 4.3% from 4.4% a month earlier. Health care was the largest contributor in the numbers, adding 82,000 jobs. Construction gained 33,000 jobs, most other sectors were flat, and the federal government shed another 35,000 positions.

With 159 million people employed in the US, there have never been more people employed in the country than today. Interestingly, the number of workers would be even higher if the participation rate returned to its highest level (from the mid-nineties), which has fallen as of late due to aging baby boomers and other societal reasons. Said another way, the record number of workers has more to do with population growth/aging that it does to do with broadening participation.

What did markets think of the report? It’s apparently complicated as markets wobbled the day of the release. Once again, the question became is good news for the economy good news (or bad news) for markets?

On one hand, a strong labor market is a critical dynamic to a high-functioning economy. It’s an encouraging sign that the period of slow growth in 2025 (brought on a variety of events that slowed hiring including a trade are, immigration crackdown, and government “efficiency” initiatives) seems to have reversed course.

On the other hand, a stronger labor market may delay further rate cuts (which are like oxygen for equities). As Federal Reserve Chairman Powell made clear at last month’s press conference (where rates were held steady), the Fed was not convinced that weakness in the labor market was notable enough to cut rates at that time. His message was that the Fed would remain on pause (ie: keep rates where they are at) until either side of their dual mandate (labor markets and stable prices) warranted a move. This solid employment report does little to change that perspective but as always, next month could tell a different story.

For now, I’m choosing to view “good news as good news” – seems like a nice filter to apply to many things!

Onward we go,