Yesterday, as soon as the U.S. non-farm data was released, the market exploded: superficially strong, but hiding major pitfalls inside!
In January, non-farm employment increased by as much as 130,000, far exceeding the market expectation of 55,000 to 70,000, and the unemployment rate unexpectedly dropped to 4.3%, with an average hourly wage year-on-year increase of 3.7%, also surpassing expectations. Once the data was released, U.S. stock futures jumped, the dollar surged, and rate cut expectations were directly slapped in the face—at first glance, this is a strong signal of the labor market suddenly 'reviving'!
But don’t rush to pop the champagne. The real shock lies in the annual benchmark revisions published on the same day:
• The total employment growth for 2025 was cut from the original 584,000 to only 181,000! An average monthly increase of only 15,000, marking the worst annual performance in over 20 years.
• From April 2024 to March 2025, a total of nearly 900,000 positions were revised down, which is more than 2.5 times the average of the past decade and the second-largest negative revision in history.
• In the past year, the U.S. economy has actually been hovering on the edge of 'invisible unemployment': in the second half of the year, almost a net loss of jobs, high-paying industries laying off workers, with growth relying solely on healthcare and construction (partly thanks to a mild winter).
In simple terms: what everyone saw before as a strong 'soft landing' in employment was an inflated version. Now officially punctured, the real trend of the labor market is frighteningly weak. January's 130,000 looks impressive, but many analysts are directly calling it 'just a statistical base effect + short-term rebound', which does not represent a comprehensive recovery.
Economist Claudia Sahm pointed out sharply: 'The good news is January is good, but the downward revisions are huge—over a million jobs fewer than estimated! Four months in 2025 will have direct negative growth; is this a healthy labor market?'
Trump immediately called for the Fed to cut rates on social media, but the market is now more entangled: will this 'strong on the outside but weak on the inside' report make the Fed more hawkish (inflation pressure), or will it be forced to accelerate rate cuts to save the market?
In short, this non-farm report is not a 'surprise', but a shock—while the headline numbers look beautiful, the truth behind them is brutal. The next few months of data will truly test the resilience of the U.S. economy. Do you think this round of revisions will bring rate cuts back on track?
