Robust jobs gain in January shows the economy’s durability
WASHINGTON — U.S. employers shrugged off last month’s partial shutdown of the government and engaged in a burst of hiring in January, adding 304,000 jobs, the most in nearly a year.
The gain the government reported Friday illustrated the job market’s resilience nearly a decade into the economic expansion. The U.S. has now added jobs for 100 straight months, the longest such period on record.
The unemployment rate did rise in January to 4 percent from 3.9 percent, the Labor Department said, but mostly for a technical reason: The number of people counted as temporarily unemployed jumped 175,000, with most of that increase consisting of federal workers and contractors affected by the shutdown.
The government on Friday also sharply revised down its estimates of job growth in November and December. Still, hiring has accelerated since last summer, a development that has surprised economists because hiring typically slows when unemployment is so low.
“The overwhelming conclusion from today’s numbers is that the U.S. labor market remained incredibly strong at the start of 2019,” said Leslie Preston, senior economist at TD Economics.
Diane Swonk, chief economist at Grant Thornton, said that many federal workers and contractors likely went out and found part-time work during the 35-day shutdown. The ability of many of them to do so is itself a sign of the job market’s strength, Swonk said.
Last month’s healthy job gain will assuage some concerns that had arisen about the U.S. economy. Global growth is weakening, the Trump administration is engaged in a trade war with China and higher mortgage rates have slowed home sales. Those factors have led many economists to forecast slower growth this year compared with 2018.
Yet strong hiring should boost household incomes, fueling more consumer spending, which would help drive growth.
Most sectors of the economy reported solid hiring gains in January. Education and health care added 55,000 jobs, retailers nearly 21,000 and professional and business services, which includes such higher-paying positions as engineers and architects, 30,000.
The ongoing demand for workers is leading some businesses to offer higher pay to attract and keep staff. Average hourly wages rose 3.2 percent in January from a year earlier. That’s just below the annual gain of 3.3 percent in December, which matched October and November for the fastest increase since April 2009.
Teresa Carroll, an executive at the staffing firm Kelly Services, said her company has explained to clients that they have to pay more to find the workers they need. Some employers are still reluctant to offer higher pay, which has made it harder for them to find and keep workers, she said.
“They’ve enjoyed two decades of minimal pay growth in general,” she said. “It’s our job to educate our clients about the labor market.”
On a monthly basis, from December to January, wages barely rose, though. That’s likely to keep the Federal Reserve unlikely to raise interest rates in the coming months, economists said. Chairman Jerome Powell said this week that the case for raising the Fed’s benchmark rate had weakened. Many economists and investors took that as a sign that a rate increase is unlikely any time in the coming months.
Swonk cautioned that some quirks likely inflated last month’s job gain. For example, some of the furloughed federal workers and contractors who took part-time jobs during the 35-day government shutdown might have been counted as having two jobs during January. Now that the shutdown has ended, these people will go back to being counted as having just one job beginning in February.
And for most of January, the weather was relatively warm in much of the United States, which likely boosted construction employment. Builders added 52,000 jobs, the most in nearly a year.