The Labor Department said today that the U.S. economy added a below-forecast 143,000 jobs in January, but the moderate performance followed an upwardly revised gain of 307,000 jobs in December and showed that the nation’s long-term growth trend still has staying power.
Matt Gruhn, president of the Marine Retailers Association of the Americas, told Trade Only Today that “the economy seems to remain in fairly good shape. At the moment, it feels like the economy is in a bit of a wait-and-see mode, trying to gain an understanding of how some of the new administration’s recent moves and forward-looking priorities will impact some of the key indicators.
“From a boat-show standpoint, results have been mixed,” Gruhn added. “From what we’re seeing and hearing, those dealers who did their work and prepared well for their show are the ones who have performed well. Those who didn’t engage customers, who didn’t proactively set up appointments and otherwise work to attract customers, are the ones who seemed to struggle the most. It seems obvious, but in a market that’s not signaling strong signs of growth, the extra effort makes an enormous difference.”
Ian Wyatt, director of economics at recreational marine lender Huntington Commercial Bank, is focused on how narrow the job gains were in January.
“While it was good to see the economy add 143,000 jobs and 111,000 private-sector jobs, the narrowness of the job growth is concerning,” Wyatt told Trade Only Today.
“Retailers, health care and social assistance, and government (largely local) drove most all of the job growth,” he said. “Employment in transportation equipment manufacturing, which includes auto and boat manufacturing, fell by 12,000. Consumers still seem to be avoiding debt-financed, large purchases. Much of the growth in consumer debt over the past year has been in credit cards and other loans. Outstanding mortgage balances are flat, and there is limited growth in auto loan balances.”
In today’s jobs report, the government revised job growth downward for the 12-month period through March of last year by 589,000. That figure was more encouraging than an initial estimate several months ago that said the markdown would be 818,000 jobs.
“There were major revisions in this jobs report, which showed the 2024 economy was stronger than we realized,” Wyatt said. “Historical payrolls were revised down by 600,000 jobs. While not great, early estimates of the downward revision were around 1 million jobs.
“It is important to [understand] the revision in context,” he added. “Even post-revision, we added 2 million jobs over the last year, which is a very strong year. There were substantial changes to both of the surveys in the jobs report. Outside of the downward revision to the business/payroll survey, we had a huge upward revision to the household survey. The number of employed people rose by 2 million with the new estimates in the total U.S. population from Census.
“Going forward, in our discussions with companies on tariffs, we hear a greater focus on reshoring manufacturing,” Wyatt said. “The challenge for manufacturers is skilled labor. Most every employer tells us that skilled manufacturing workers are difficult to find, and their current technically skilled workers, such as tool and die makers, are mostly near or at retirement age.”
The government’s monthly report today said the jobless rate continues to edge lower, falling to exactly 4%, and that worker pay rose by a higher-than-expected 0.5% ahead of next week’s important Miami International Boat Show, which opens Wednesday, and several other February shows.
During the past 12 months, worker earnings have increased 4.1%, remaining well above the current rate of inflation. That level of pay gains continues to support solid growth in consumer spending, which the Commerce Department said rose 0.7% in December after climbing an upwardly revised 0.6% in November.
Nonetheless, February’s first measure of the consumer’s mood was distinctly pessimistic. The University of Michigan said today that its preliminary Consumer Sentiment Index for the month was 67.8, down from 71.1 in January, and the lowest reading since last July.
One-year inflation expectations among those surveyed climbed to their highest since November 2023.
“The decrease was pervasive, with Republicans, independents and Democrats all posting sentiment declines from January,” Joanne Hsu, director of the university’s Surveys of Consumers, said in a statement. “Many consumers appear worried that high inflation will return within the next year.”
Interviews for the university’s survey ended Feb. 4, which was the day after President Donald Trump temporarily ended his tariff disputes with Canada and Mexico by suspending tariff threats against them for a month.
The labor-force participation rate — the measure of the population that is in the workforce — was 62.6%, up slightly from the previous month.
The government revised upward November’s job total by 49,000, to 261,000, and combined with December’s upward revision of 51,000, the combined total for the two-month period grew by 100,000.
The Federal Reserve’s policy-making committee held rates steady at its late-January meeting, and does not meet again until March 18-19. Treasury Secretary Scott Bessent said Wednesday that the Trump administration is focusing on bringing down borrowing costs by reducing the 10-year Treasury yield, rather than pushing the Fed to reduce the short-term federal funds rate.
“For consumers, short-term rates are less relevant than the 10-year rate and other long-term rates because long-term rates drive the price of mortgages, car loans, boat loans and most consumer debt,” Wyatt said. “Credit card debt is the only major type of consumer debt that is tied to the short-term federal funds rate.
“If you’re looking at the affordability of buying a house or a car, Treasury Secretary Bessent bringing the 10-year back to the forefront makes sense,” he added. “Overall, most consumers are feeling good about their balance sheets. Home values continue to rise. The average household has debt-servicing costs near record lows, and their stock portfolios are doing great, with the S&P up 23% over the past year and 48% over the past two years. Where we see some stress are lower-end consumers without a lot of assets.
“Today’s data supports what [Fed chairman Jerome] Powell said at the last press conference: ‘wait and see,’ ” Wyatt said. “The Fed has not reached its 2.0% inflation target, and uncertainties in the economy and a still-tight labor market support our view that the Fed is unlikely to cut rates before summer because the Fed is concerned that inflation will persist above target.
“Wage growth came in at 4.1% year-over-year, compared to inflation rising 2.9%, and strong stock market gains means consumers have real buying power,” Wyatt said. “For boat dealers, the Fed funds rate is relevant because it determines SOFR [secured overnight financing rate] and prime, which are how boat inventory loans are priced.
“While we think consumers and companies are starting to accept that rates may not fall back to the low levels of 2010-2020, we still see hesitancy in debt-financed purchases like autos and boats,” Wyatt added. “Consumers are focused on experiences. Holiday retail sales were very strong. We see strong travel demand. The question for boat dealers would be how to lean into this experience-driven [economy].”
The government said health care was again the category leader in January, adding 44,000 jobs; growth in that segment was 57,000 a month during 2024. Retail trade employment rose by 34,000 in January, government employment added 32,000 jobs, and social assistance added 22,000.
Ahead of Friday’s jobs report, the Labor Department said Tuesday in its monthly Job Openings and Labor Turnover Survey that vacancies nationally fell by 556,000, to 7.6 million, in December.
The figure represented a three-month low. The decline was led by the professional and business services sector, which had 225,000 fewer positions than a month earlier.
The number of vacancies per unemployed worker was 1.1 for the sixth month in a row. Openings in health care and social assistance fell by 180,000, and there were 136,000 fewer openings in the finance and insurance industries.
Hirings rose by 89,000, to 5.5 million. Layoffs fell by 29,000, to 1.8 million.
The ADP Research Institute said Wednesday in its National Employment Report for December that private-sector employment rose by 183,000 in January after an upwardly revised 176,000 the previous month.
Annual pay was up by 4.7% on a year-over-year basis among people who stayed in their current jobs. Among job-changers, the gain was 6.8%.
“We had a strong start to 2025, but it masked a dichotomy in the labor market,” Nela Richardson, the institute’s chief economist, stated in a press release. “Consumer-facing industries drove hiring, while job growth was weaker in business services and production.”
The institute said hiring at medium-size businesses (50 to 499 employees) led January’s growth, with 92,000 newly employed. The overall gain in employment was greatest in the West, where 70,000 were hired.
