The unemployment rate fell to 4.3%, the Labor Department said Wednesday.

The report included major revisions that reduced the number of jobs created last year to just 181,000, a third of the previously reported 584,000 and the weakest since the pandemic year of 2020.

The job market has been sluggish for months even as the economy registers strong growth.

But January’s numbers were stronger than 75,000 economists had expected. Health care accounted for nearly 82,000, or more than 60%, of new jobs last month. Factories added 5,000, snapping a 13-month streak of job losses. The federal government shed 34,000 jobs.

Average hourly wages rose a solid 0.4% from December to January.

The unemployment rate fell from 4.4% in December as the number of Americans employed and the number of unemployed fell.

“The surprising strength in employment in January was driven primarily by health care and social assistance,” Heather Long, chief economist at Navy Federal Credit Union, wrote in a commentary. “But it was enough to stabilize the job market and send the unemployment rate slightly lower. . . .

The weak hiring last year shows the lingering effect of the high interest rates engineered by the Federal Reserve in 2022 and 2023 to prevent the rise of inflation, as well as Elon Musk’s. Be Clean last year in the federal workforce. The chaos comes from President Donald Trump wrong trade policies also makes businesses less willing to hire.

The dreary numbers come ahead of Wednesday’s report. Only posted by employers 6.5 million job openings in December, the least in more than five years.

Payroll processor ADP reported last week that private employers added an unexpectedly weak 22,000 jobs in January. And outplacement firm Challenger, Gray & Christmas reported that companies cut more than 108,000 jobs last month, the most since October and the worst January for job cuts since 2009.

Nicole Bachaud, a labor economist at ZipRecruiter, said Wednesday’s new data could signal “the beginning of a revival in the labor market.”

Hiring is picking up, he said, from the Fed’s three interest rate cuts last year. Trump’s tariffs have proven to be relatively small and more predictable than those that emerged last spring, giving employers more confidence to hire. Bachaud also noted that black unemployment, which he sees as a sign of where the overall job market may be headed, fell last month to 7.2%, the lowest since July.

Samuel Tombs of Pantheon Macroeconomics remained skeptical, saying January’s job gains were part of unusually warm weather that boosted hiring. He noted that construction companies added a strong 33,000 jobs last month. “We think it is premature to conclude that the labor market has decisively turned a corner,” he wrote.

Last year’s sluggish job market did not match the economy’s performance.

From July to September, America’s gross domestic product – its output of goods and services – ran at a 4.4% annual pace, the fastest in two years. Consumer spending in the past FIRMand rising exports and stagnant imports boosted growth.

Economists are wondering if job creation will eventually accelerate to catch up to strong growth, perhaps as President Donald Trump’s tax cuts translate into big tax refunds that Americans start spending this year. But there are other possibilities. GDP growth could slow and fall in line with a weak labor market or AI advances. Automation may mean that the economy grows without as many jobs.

At West Shore Home, a remodeling company in south central Pennsylvania with 3,000 employees, business is brisk. West Shore plans to hire about 200 workers by 2026, similar to last year.

Many homeowners can’t afford, or don’t want to sell after locking in affordable mortgages years ago. Instead, they improved the areas they owned.

Like many other businesses, artificial intelligence has come to West Shore Home. Jessica Bittinger, chief human resources officer, said the company began using AI to simplify tasks such as scheduling projects. He doesn’t expect the company to cut jobs because of AI, but he also believes he won’t need to hire as many people in the future. “It helps our employees work smarter, not harder,” he said.

Wednesday’s jobs report could lead the Fed to further delay further cuts in its key interest rate. Some Fed officials specifically argued that last year’s weak hiring shows that borrowing costs are weighing on growth and discouraging companies from expanding. A hiring pickup, if sustained, undermines that view.

Fed officials signaled in December that they expect to reduce their key rate once more this year, while Wall Street investors expect two reductions, according to futures prices.

Wednesday’s report includes the government’s annual benchmark changes, which are aimed at taking into account more accurate job numbers reported by state-owned unemployment agencies. They cut 898,000 jobs from payrolls in the year ending March 2025.

The changes, which may reflect more accurate information about businesses opening or closing, cut the tally of jobs created from April to December last year to 120,000 (or 13,000 a month) from the originally reported 251,000 (or 28,000).

Despite the recent high-profile layoffs, the unemployment rate is better than the hiring numbers.

That’s partly because President Donald Trump’s immigration crackdown has reduced the number of foreign-born people competing for jobs.

Consequently, the number of new jobs that must be created in the economy to keep up with the rising unemployment rate falls. Brookings Institution researchers believe it could be below 20,000 and on the way down.

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AP Retail Writer Anne D’Innocenzio in New York and AP Economics Writer Christopher Rugaber contributed to this report.