Unemployment Rate Dips to 4.0 Percent
February 7, 2025 – Employment rose by 143,000 in January as the U.S. unemployment rate dipped slightly to 4.0 percent, according to the most recent U.S. Bureau of Labor Statistics report. The number of unemployed persons was 6.8 million in January. Job gains occurred in healthcare, retail trade, and social assistance. Employment declined in the mining, quarrying, and oil and gas extraction industry.
Among the major worker groups, the unemployment rates for adult men (3.7 percent), adult women (3.7 percent), teenagers (11.8 percent), Whites (3.5 percent), Blacks (6.2 percent), Asians (3.7 percent), and Hispanics (4.8 percent) showed little or no change in January. The number of long-term unemployed (those jobless for 27 weeks or more), at 1.4 million, changed little in January. The long-term unemployed accounted for 21.1 percent of all unemployed people. In January, both the labor force participation rate (62.6 percent) and the employment- population ratio (60.1 percent) were unchanged, after accounting for the annual adjustments to the population controls. Both measures have been relatively flat in recent months.
The number of people employed part time for economic reasons, at 4.5 million, changed little in January. These individuals would have preferred full-time employment but were working part time because their hours had been reduced or they were unable to find full-time jobs. The number of people not in the labor force who currently want a job, at 5.5 million, was little changed in January. These individuals were not counted as unemployed because they were not actively looking for work during the four weeks preceding the survey or were unavailable to take a job.
Among those not in the labor force who wanted a job, the number of people marginally attached to the labor force, at 1.6 million, was essentially unchanged in January. These individuals wanted and were available for work and had looked for a job sometime in the prior 12 months but had not looked for work in the four weeks preceding the survey. The number of discouraged workers, a subset of the marginally attached who believed that no jobs were available for them, changed little at 592,000 in January.
“This morning’s report may be considered a Goldilocks report, not too hot and not too cold,” said Jeffrey Roach, chief economist at LPL Financial. “An unemployment rate at 4% is considered very low, giving the Fed reason to keep fed funds unchanged in the near term.”
Where Job Growth Occurred
- Healthcare added 44,000 jobs in January, with gains in hospitals (+14,000), nursing and residential care facilities (+13,000), and home healthcare services (+11,000). Job growth in healthcare averaged 57,000 per month in 2024.
- Employment in retail trade increased by 34,000 in January. Job gains occurred in general merchandise retailers (+31,000) and furniture and home furnishings retailers (+5,000). Electronics and appliance retailers lost 7,000 jobs. Retail trade employment had shown little net change in 2024.
- Social assistance added 22,000 jobs in January, led by individual and family services (+20,000). Employment also rose in the community food and housing, emergency, and other relief services industry (+4,000). Employment in social assistance grew by an average of 20,000 per month in 2024.
- Government employment continued to trend up in January (+32,000), similar to the average monthly gain in 2024 (+38,000).
- Employment in the mining, quarrying, and oil and gas extraction industry declined by 8,000 over the month, following little net change in 2024. In January, the job loss was concentrated in support activities for mining (-8,000).
- Employment showed little change over the month in other major industries, including construction, manufacturing, wholesale trade, transportation and warehousing, information, financial activities, professional and business services, leisure and hospitality, and other services.
Looking Ahead
Global hiring intentions have stabilized heading into the first quarter of 2025, with employers reporting a Net Employment Outlook (NEO) of 25 percent, according to the latest ManpowerGroup Employment Outlook Survey. The survey, which gathered data from over 40,000 employers across 42 countries, shows the outlook remaining unchanged from the previous quarter while showing a modest decrease of one percentage point year-over-year.
Executive Search in 2024: Challenges, Trends, and Hopes for a Hiring Resurgence in 2025
For many search firms in almost all industry segments, 2024 has been a tough year. There are many reasons for the recent downturn, and some firms have experienced a dip in revenues for even longer, according to Tim Tolan, founder, chairman, and managing partner of The Tolan Group. “Lots of changes are on the horizon for 2025 on the hiring front, and search firms are waiting with bated breath while hiring decisions are on hold, and draft fee agreements are (still) sitting in DocuSign waiting to be signed,” he said. “Decisions are dragging, as are active search engagements, as hiring managers and leaders struggle to make hiring decisions in the environment, we are all trying to navigate.”
In the Hunt Scanlon 2024 Executive Recruiting State of the Industry Report, the numbers reflected a double-digit downturn in demand for executive recruiting, with the private equity sector being the most affected. “We’ve seen and experienced that firsthand, but we feel positive changes are on the horizon,” Mr. Tolan said.
“As we move into 2025, we’re seeing stable year-over-year hiring trends with employers holding onto the talent they have and planning muted hiring for the quarter ahead” said Jonas Prising, chair and CEO of ManpowerGroup. “The fluctuations we have seen in recent quarters are beginning to stabilize – indicating employers have adapted to ongoing economic uncertainty and are maintaining steady workforce planning. The sustained strength in the IT sector and consistent hiring intentions among larger organizations point to stability too – and we hope to see this trend continue into 2025. Employers know a skilled and adaptable workforce is key to navigating transformation, and many are prioritizing hiring and retaining people with in-demand, flexible skills that can flex to where demand sits.”
With stable outlooks across the regions, employers in the North America (32 percent) region reported the strongest hiring intentions, followed by the Asia Pacific (27 percent), South and Central Americas (23 percent), and Europe, the Middle East, and Africa (19 percent). Employers in 12 countries report a stronger hiring outlook compared with the same period last year, weakening in 28, according to the ManpowerGroup report.
ManpowerGroup found that hiring expectations remain the lowest in Europe, the Middle East, and Africa (19 percent), and has weakened by two percentage points since the fourth quarter of 2024 and one percentage point year-over-year. Outlooks vary across the region with employers most keen to hire in South Africa (31 percent).
Related: Predicting Talent Acquisition Trends for 2025
Contributed by Scott A. Scanlon, Editor-in-Chief and Dale M. Zupsansky, Executive Editor – Hunt Scanlon Media
