January 2025 U.S. Labor Market Report

Below is the summary of key highlights from the January 2025 U.S. Labor Market Report.

Overview:

The U.S. labor market remains resilient as we enter 2025, with steady job growth and a continued trend of low unemployment. The economy is showing signs of adaptation to shifting global conditions, with robust wage growth and a high demand for skilled labor. However, challenges remain, including regional disparities in employment gains and ongoing adjustments in certain sectors.

Key Takeaways:

• The U.S. economy added 250,000 jobs in January, continuing the strong trend seen in late 2024. Job gains were broad-based across several sectors, including healthcare, professional services, and technology.
• The unemployment rate remained stable at 3.5%, matching the 50-year low observed in the previous month. The number of people actively seeking work remains consistent, indicating continued confidence in the job market.
• Average hourly earnings increased by 4.2% year-over-year, reflecting a strong demand for workers and tight labor market conditions. Wages continue to outpace inflation, suggesting that workers are benefiting from higher compensation in many industries.

Construction:

Job gains in construction remained robust, adding 30,000 positions, supported by infrastructure projects and residential development.

Outlook:

As we move further into 2025, the U.S. labor market is expected to maintain steady growth, albeit at a slightly slower pace compared to the rapid expansion seen earlier in the recovery period. Job openings remain abundant, particularly for those with specialized skills, and wage pressures are likely to persist.

We are now entering the time of year when over 15% of the labor force will be changing jobs between January and March. This translates to up to 24 million people joining new companies by spring.

Professional Search Advisors Insights:

One thing we are noticing across the board is flexibility is still the number one motivational factor which had been traditionally “total compensation”. We are seeing candidates take a step down in pay if the role is fully remote or hybrid vs. in office 5 days. With large employers and federal workers being required to come back to the office 5 days week we believe this trend will continue to persist into 2025.