U.S. employers add robust 304K jobs; joblessness up to 4 pct

04 February, 2019, 17:11 | Author: Erin Carter
  • An employment sign hangs from a wooden fence on the property of a McDonald's restaurant Thursday Jan. 3 2019 in Atlantic Highlands N.J

Offering the latest snapshot of the economy, the official employment report out Friday showed the U.S. added significantly more jobs than expected in January and that wages increased despite the longest partial government shutdown in history.

The unemployment rate ticked up slightly in January, from 3.9 to 4.0 percent, while wages rose 3 cents on average. I also predict that earnings will post a 7-cent increase, for a 3.1 percent year-over-year gain. January marks the 100th straight month of job growth.

The unemployment rate increased to 4%, however, as more people entered the labor force. Those who continued to work through the shutdown without pay were marked "employed" in both surveys. Many economists and investors took that as a sign that a rate increase is unlikely any time in the coming months.

In January, employment grew in several industries, including leisure and hospitality, construction, health care, and transportation and warehousing.

The federal government was shut down for the survey period covered by the January jobs report. The report came two days after the Fed signaled its three-year interest rate hike campaign might be ending because of rising headwinds to the economy, including financial market volatility and softening global growth.

How did the shutdown change the jobs report?

Nonfarm payrolls jumped by 304,000 jobs last month, the largest gain since February 2018, the Labor Department said.

China's economy is decelerating sharply and Italy's economy has entered recession, exacerbating fears that slower global growth will cut into US exports.

NOGUCHI: Private sector can't fill jobs.

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Tens of thousands of contracted federal employees that were not working during the government shutdown and are not legally entitled to compensation equal to the hours they missed may have been counted as unemployed in the DOL's numbers for January.

Friday's solid jobs report provided a dose of reassurance that the economy remains mostly healthy and likely to shake off any effects of the shutdown.

"The Fed chickened out on further rate hikes this year and boy are they ever misreading the tea leaves on where the economy is going next", Chris Rupkey, chief economist at MUFG in NY, told Reuters.

On a monthly basis, from December to January, wages barely rose, though. (Data are not seasonally adjusted.) These individuals were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months. "It's our job to educate our clients about the labor market". The Labor Department still counted them as employed since the workers were going to be paid eventually.

ADP reported private sector employment increased by 213,000 jobs in January.

Still, experts put more stock in yearly averages than monthly ones, warning that unemployment rates for veterans can be volatile because they're based on a smaller sample size.

And for most of January, the weather was relatively warm in much of the United States, which likely boosted construction employment.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc.

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