NM unemployment rate increases to 4.4% in January

New Mexico’s unemployment rate increased slightly in January to 4.4%, a potential sign of things to come under a second Trump administration that has so far included federal budget cuts and mass layoffs.

New Mexico’s unemployment rate — tied for 36th-lowest with three other states: Indiana, New York and Oregon — is an increase from December’s reading of 4.3%, according to the latest report from the New Mexico Department of Workforce Solutions. But it is a larger year-over-year increase from January 2024, when the rate of unemployment was 3.8%.

Reilly White, an economist and professor at the University of New Mexico, said the rising unemployment rate “suggests businesses are pulling back on hiring, likely due to higher interest rates, economic uncertainty and shifting consumer demand.”

“While a 4.4% rate isn’t alarming in historical context, the trend matters more than the number,” White said. “If it keeps ticking up, it’s a sign that rougher economic times may be ahead.”

While the unemployment rate ever so slightly crept up compared to last year, the total number of nonagricultural jobs increased by 15,300 jobs, according to the report. The largest gains came in the private sector, which was up 12,600 jobs year over year. Within the private sector, service-providing industries were up 8,700 jobs and goods-producing industries 3,900 jobs.

The public sector — government roles — was up 2,700 jobs, according to the report. Most gains came from state-level hires. Federal government year-over-year jobs were down 500.

But Trump administration budget cuts, White said, could also result in reduced spending by state and local governments and lead to an additional loss of jobs.

“Many government jobs — especially in education, health care and public safety — are funded directly or indirectly through a mix of state revenue and federal support,” White said. “If federal funding streams dry up or shift priorities, states and cities could feel the squeeze in certain areas.”

However, not all government jobs “move in lockstep,” White added.

“If the economy slows further, some areas like health services or infrastructure could see continued hiring. Here in New Mexico, we’re highly dependent on government jobs, and we don’t have real clarity on what that means for the state right now.”

On the county level, which uses nonseasonally adjusted rates, Bernalillo County had an unemployment rate of 4.1%, Santa Fe County 4.2%, Doña Ana 5.4% and Sandoval County 4.3%, according to the report. The lowest unemployment rate was that of Los Alamos County at 2.1%; the highest was Luna County at 15.4%.

Preliminary numbers for January show the Albuquerque metropolitan statistical area accounted for 448,598 of the state’s 945,635 employed residents. Santa Fe’s metropolitan statistical area accounted for 70,839, according to the report.

On a national level, South Dakota had the lowest unemployment rate in January at 1.9%; Nevada had the highest at 5.9%, according to the U.S. Bureau of Labor Statistics.

White said it’s possible state and national unemployment rates can continue to climb, though it “depends on how consumers and businesses react.”

“There’s a lot of economic uncertainty, driven in part by economic policy changes — and uncertainty always has costs,” White said. “Tariffs and global uncertainty could make companies more hesitant to expand payrolls; on top of higher borrowing costs we’ve been experiencing the last couple years, it makes for a rocky road ahead.”