Despite shutdown, US employers add robust 304K jobs in January

Irving Hamilton
February 3, 2019

The U.S. labor market added over 300,000 jobs in January.

"Barring further tightening in financial conditions that would negatively impact economic activity, the very strong labor market picture supports our expectations that the Fed will keep a tightening bias this year".

The U.S. economy added a higher-than-expected 304,000 jobs in January, while the unemployment rate edged up to 4 percent, the Bureau of Labor Statistics said on Friday.

The numbers exclude farm work, which is seasonal and often volatile. Average earnings for all workers grew slightly slower than the month before, at 3.2 percent year-over-year.

But the rate of job growth in the industry is also bringing up labor costs as companies increase wages to lure workers that are increasingly hard to find.

US economic growth is slowing from its rapid 2018 pace, but the continued robust gains in employment may cause pause to commentators that have been calling for recession.

The shutdown also likely nudged up the number or people working part-time for economic reasons, sometimes referred to as involuntary part-time workers.

Construction employment rose by 52,000.

Job gains in January were led by the leisure and hospitality sector, which has added 410,000 jobs over the past year.

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Numerous remaining furloughed federal employees were classified as "employed but absent from work", so those employees were not counted in the unemployment rate.

The manufacturing sector added 13,000 jobs in January, making its 12-month total 261,000. The increase was because some furloughed federal workers and government contractors took on part-time jobs to make ends meet when they not paid during the shutdown.

Though Jacumin, 42, and her husband both have Navy pensions, her new job has provided much-needed income and health insurance.

But in a separate survey of households that's used to calculate the unemployment rate, some of these people were counted as temporarily jobless.

Wages are being pushed up across a wide range of job sectors as the unemployment rate remains low and employers try to attract more workers with higher pay. The shutdown ended last Friday after Trump and Congress agreed to temporary government funding, without money for his U.S. -Mexico border wall.

The Congressional Budget Office estimates the shutdown will cut economic growth by 0.4 percentage points in the first quarter of 2019, although some of that will be recouped later in the year. But some say that even businesses that lost income from the shutdown likely held onto their staffs, knowing that the shutdown would only be temporary.

The reports that have been released have been mixed.

But consumer confidence fell in January for a third straight month as Americans' optimism dimmed amid the shutdown and sharp drops in the stock market.

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