U.S. Nonfarm Payrolls beat expectations in January 2026, unemployment falls – Big story are the revisions

The Nonfarm payrolls in the United States rose 130,000 in January from December’s revised gain of 48,000 (down from 50,000), and November added a revision of 41,000 (down from 50,000 previously reported). Looking at the breakdown of the report, key sectors that contributed to the headline number were health care (+82,000), social assistance (+42,000), construction (+33,000), and federal government (-34,000). The elephant in the room was the annual benchmark revisions, which saw that the Bureau of Labor Statistics revised the March 2025 level of seasonally adjusted payroll employment down 898,000. In all, these revisions are likely to dominate the interpretation of the report due to the fact that benchmarking can rewrite the narrative of the entire year.

What does this mean for the markets

When payrolls beat and expectations and wages print in the range of 0.4% month of month, bond traders typically price in higher yields. Reuters described this report as reinforcing a “steady Fed view,” with yields rising and a reduction of the urgency of rate cuts. Meanwhile, further gains in the stock market should not be ruled out amid the payrolls beat, as it implies the consumer is not out in the wind just yet. However, the benchmark revision implying that 2025 was far weaker than expected may lead market participants to rethink the “soft landing narrative.” 

Key Points: 

• The Fed doesn’t need labor to be amazing; it needs the labor market. 
• Wage growth is to warm to declare victory (0.4% month over month and 3.7% year over year) 
• A U.S. labor market that is still adding jobs is positive for global growth sentiment; however, if this leads the Fed to keep rates restrictive for longer, the dollar and U.S. yields can pressure commodity-importing countries and global tech-duration assets. 
• If revisions keep dragging the historical trend lower, recession risk pricing will likely come back into view. 

Price action

U.S. Dollar Index

Source: https://sigmanomics.com/stocks

Price action of the weekly U.S. dollar index remains confined by its descending channel that has been in place since 2022. Short term, there is also a horizonal trend line supporting the index 97.0, and as long as we do not witness a close below this area, an upside correction should not be ruled out. However, should prices break and close below this notable zone, downside risks toward equal Elliott wave legs at 95 will be in focus. For bulls, medium to long-term resistance should resistance is seen at 106.00