By Nick Timiraos

The January employment report is likely to cement the Federal Reserve's wait-and-see posture, making it difficult for officials to build a case for further rate cuts based on labor-market weakness.

It could give more ammunition to inflation-wary "hawks" who will point to signs that interest rates aren't meaningfully restricting economic activity.

That evidence includes the continued decline in the jobless rate, a drop in the number of people working part-time jobs because they couldn't find full-time work, and a decrease in ranks of those unemployed for more than six months. All of these data points could suggest the labor market is stabilizing after the softening that prompted three consecutive rate cuts last year.

Unemployment has declined steadily despite modest payroll growth. That adds to evidence that the breakeven pace of job creation-the level needed to keep the unemployment rate stable-has fallen as the number of people looking for work has dropped.

Some Fed officials have suggested that figure could be as low as 50,000 or below, meaning the economy may need far fewer new jobs each month than it once did to maintain a healthy labor market.

"The economy has, once again, surprised us with its strength-not for the first time," Fed Chair Jerome Powell said at a news conference last month, as he defended the Fed's decision to hold rates steady at its first meeting of the year.

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(END) Dow Jones Newswires

February 11, 2026 08:54 ET (13:54 GMT)

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