February 11, 2026

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Privatge sector employment climbed by 130 thousand in January following an increase of 64 thousand in December.  In the past three months private employment has risen on average by 103  thousand per month.   Employment should continue to rise slowly in the months ahead.  For the year as a whole payroll employment for 2025 was revised downwards from a total year increase of 584 thousand to a gain of just 181 thousand.  But the downard revisions were almost entirely in the January through April period when deportations for foreign workers were at their peak, and when employmers were when highly uncertain about the path and magnitude of tariffs.  While those early year changes were, in fact revised downwards, it tells us very little about what is going on currently.

In addition to hiring workers employers can also alter the length of the workweek for their existing workers.  The nonfarm workweek rose  0.1 hour in January to 34.3 hours after having fallen 0.1 hour in December.  Prior to the recession the nonfarm workweek was averaging 34.4 hours so it is currently just a snitch shoerter than it was six years ago.

Uncertainty about tariffs and the availability of immigrant workers has altered hiring decisions to some extent.  Firms in many cases are not replacing a worker that leaves the company and are thereby reducing headcount by attrition.  Firms are also using artificial intelligence to fill some of the need for some types of jobs.  But they are not yet prepared to actually lay off workers as initial unemployment claims (a measure of layoffs) has been fairly steady.  But a number of companies have announced sizeable layoffs in the months ahead so we need to keep an eye on claims to see if it begins to climb.

Job openings have fallen from a record high level of 11.7 million in early 2021 to 6.5 million.  Prior to the recession there were about 7.0 million job openings per month versus 7.1 million currently. Today there are still 0.9 job openings for every unemployed worker which is just slightly lower than where this was prior to the recession (1.1).  Employers are nervous and are responding by slowing employment growth via attrition and by shortening the workweek.  The labor market has weakened a bit, but for now it is holding rather steady.

.The weakness in the labor market occurred early in the year when he labor force declined somewhat bedtween January and May.   The decline was led bya drop in foreign-born workers.  The number of foreign-born workers fell by 1.5 million between March and July.  In the second half of last year the labor force increased steadily — led by big gains in the foreign born labor force as the deportation of immigrants has slowed.

The change in employment and hours worked are reflected in the aggregate hours index rose 0.5% in January to 116.5 after having declined 0.4% in December.  If the workweek holds steady in February and March and employment rises slowly,, the aggregate hours indes should increasse 1.5% in the first quarter which, when combined with a 2.5% increasae in productivity suggests GDP growth in the first quarter of something close to the 4.0% mark.  That follows GDP gains of 3.8% in the second quarter, 4.4% growth in the third quarter, and 3.8% growth in the fourth quarter.  The economy continues to cruise along.

Construction employment roose 33 thousand.   Manufacturing employment increased by 5 thousand.  Retail trade jobs rose 1 thousand.  Transportation and warehousing declined 11 thousand.  Info tech jobs rose 1 thousand.  Financial sector jobs declined by 22 thousand.  Professional and business service sector employment was unchanged.  Health care climbed by 82 thousand.  Jobs in social assistance rose 42 thousand.  Jobs in the leisure and hospitality industry gained 1 thousand.  Government jobs declined 42 thousand. (Federal government employment dropped by 34  thousand in January.

GDP rose 4.4% in the third quarter, we expect 3.8% growth in the fourth quarter and 3.8% in the first quarter.

Stephen Slifer

NumberNomics

Charleston, S.C.