By guest authors Eric Morath and Sarah Chaney from Wall Street Journal
Nonfarm payrolls increased a seasonally adjusted 304000 in the month
U.S. employers added jobs for the 100th straight month in January, a streak of hiring that is stoking improved wage gains and holding unemployment near historic lows.
Nonfarm payrolls increased a seasonally adjusted 304 000 in January, the Labour Department said Friday. The unemployment rate rose to 4.0 % last month. The rate has edged up the past two months since touching a 49-year low of 3.7 % last fall. The Labor Department said last month’s partial government shutdown contributed to the uptick.
Average hourly wages for private-sector workers grew 3.2 % from a year earlier. Wages are growing at the best rate since the recession ended in 2009 in recent months.
Economists surveyed by The Wall Street Journal had expected 170000 new jobs in January and a 3.9 % unemployment rate.
Revised figures show employers added 222000 jobs in December and 196000 jobs in November, a net downward revision of 70000.
More than 300000 federal workers were furloughed, meaning not reporting to work, during a large portion of January. They affected the jobs report’s two surveys in different ways.
Since the workers received backpay, they were counted as being on a payroll in the survey of employers. Federal employment increased by 1000 during the month. But since those workers didn’t report to work at all during the household-survey week, the week that includes the 12th of the month, many were counted as unemployed due to temporary layoff. That caused the jobless rate to rise to the highest level since June 2018.
Outside of the government, private-sector payrolls rose by 296000. That is well above average gain in recent years, suggesting businesses largely shrugged off any impact from the 35-day shutdown ended Jan. 25. The Labour Department remained open because it was among the agencies funded by Congress earlier in 2018.
Hiring last month increased in nearly every major category. The leisure and hospitality sector, including restaurants, added 74000 employees. Construction firms hired 52000. The manufacturing, health-care and retail sectors also added jobs. Employment declined slightly in the information sector. Local and state governments added 7000 jobs.
The labour market has been a pillar of stability during the economic expansion, with employers adding jobs every month since October 2010. The streak is more than twice as long as the next longest such stretch on record, the 48 months concluding in June 1990.
During much of those 100 months wage growth was weak, but gains improved in the second half of last year. In January, average hourly earnings for all private-sector workers increased 3 US cents to USD 27.56 an hour. Hourly wages rose by 10 cents in December. The average workweek in January was unchanged at 34.5 hours.
The labour market’s relative strength stands in contrast to signs the economy may be cooling.
The Federal Reserve indicated Wednesday that it was done raising interest rates for now, after lifting its benchmark rate four times last year.
Fed Chairman Jerome Powell, in a press conference Wednesday, raised concerns about slowing growth in major foreign economies, particularly China and Europe, and about the elevated uncertainty due to Brexit, ongoing trade negotiations and the effects from the government shutdown.
“Like many forecasters, we still see sustained expansion of economic activity, strong labour market conditions, and inflation near 2 % as the likeliest case,” he said. “But the crosscurrents I mentioned suggest the risk of a less-favourable outlook.”
Some major U.S. companies, including Apple Inc. and Caterpillar Inc., recently reported disappointing profits. But, other firms, including Facebook Inc. and Amazon.com Inc., posted record profits. Those gains alongside strong results from banks and smaller companies helped propel the best January gain for stocks in 30 years.
Friday’s (February 1, 2019) jobs report included benchmark revisions, which incorporate payroll data from tax records. The total nonfarm employment level for March 2018, the benchmark month, was revised down by 1000 to 148.28 million. But for all of last year, employers added 2.674 million jobs, and upward revision from 2.638 million. Monthly seasonally adjusted data was revised back to January 2014.
The report also showed a broader measure of unemployment, including those too discouraged to look for work, plus Americans stuck in part-time jobs but who want to work full-time, rose to 8.1% in January from 7.6% the prior month. The rate, known as the U-6, was the highest since February 2018. The rate remains elevated compared with last time the headline unemployment rate stayed near 4%, suggesting there may still be some slack in corners of the labour market.
While unemployment is near a historic low, the labour-force participation rate is still only modestly above multi-decade lows touched in 2015. Friday’s report showed the share of American adults working or looking for work to rose to 63.2 %, up a half percentage point from a year earlier.
With just a small share Americans out of work but seeking jobs, and the labour force growing only slowly, some employers have had difficulty filling job openings. Separate Labour Department data shows the number of job openings exceeds the number of unemployed Americans. Prior to last year, that had not occurred in nearly two decades of records.
Federal workers who worked without receiving their paychecks as scheduled were counted as employed in both surveys.