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A stronger-than-expected jobs report is likely to push mortgage rates up a bit, but the impact will be small. The strong labor market may also bring some house hunters off the sidelines.
Takeaway: An upbeat January jobs report will increase mortgage rates slightly, reversing yesterday’s small decline, which was driven by disappointing retail sales data.
Today’s data is unmistakably positive, pointing to a stronger labor market than other metrics have indicated.
- 130,000 jobs were created in January, with 172,000 in the private sector (the government lost jobs). This is the largest monthly increase since December 2024. Forecasters had expected a gain of only 50,000-65,000, just above the breakeven rate needed by the labor market given tighter immigration standards.
- The unemployment rate unexpectedly fell from 4.38% to 4.28%, the lowest since July. There was an increase in the number of people looking for work, which mechanically pushes the unemployment rate down, but that did not account for the entirety of the decline.
- There was strong concentration of job creation in health care (124,000 jobs). But professional and business services (34,000) and construction (33,000) also gained jobs.
- The job creation numbers are all the more impressive because today’s update to the birth-death model–how the Bureau of Labor Statistics accounts for firms being created and destroyed–was expected to result in fewer jobs.
- Adverse winter weather across much of the country did not affect today’s data because the data was collected prior to the storms.
There was a large benchmark revision to prior months, but the key question for the Fed is what happens going forward. Today’s data means there’s a slightly lower possibility of rate cuts over the next few meetings, but the Fed was unlikely to cut anyway.
- The annual benchmark revisions resulted in 898,000 fewer jobs in March 2025 than previously reported. This is largely in line with expectations. That means that job creation in 2025 was a meager 15,000 per month compared to 122,000 jobs created per month in 2024.
- However, that does not matter much for Fed policy because these revisions were forecasted and well understood. Also, the economy is widely expected to receive a boost this year from the tax cuts enacted last year as well as fading tariff effects.
For the housing market, this data means slightly higher mortgage rates. But the impact is small because the Fed was expected to hold rates steady regardless of jobs data. A less shaky labor market could help to bring some buyers off the sidelines.
Chen Zhao
Chen Zhao is the head of economics research, where she produces research on the housing market for public and internal audiences.
Previously, she was an executive director leading housing finance and financial markets research at the JPMorgan Chase Institute. Prior to joining JPMCI, Chen was an economics consultant at Analysis Group, Inc., where she worked on financial litigation cases and led teams conducting health economics and outcomes research on behalf of pharmaceutical companies.
While in graduate school, Chen was with the Center for Economic Studies and the Social Economic and Housing Statistics Division at the US Census Bureau, where she conducted applied microeconomics research using large scale restricted-access linked survey-administrative data. She started her career at the White House Council of Economic Advisers, where she focused on labor and health economics.
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