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US job growth surges in January despite government shutdown
WASHINGTON, Feb 2, 2019 (BSS/AFP) – US job creation had another
blockbuster month in January, blowing past the government shutdown, but that
disruption helped to push the unemployment rate higher, the Labor Department
reported Friday.
Employers added 304,000 net new positions last month — the highest in
nearly a year and almost double what economists had predicted — while growth
in worker pay held steady above inflation, according to the report.
The new numbers were welcome news for President Donald Trump, whose
already-low public approval rating suffered in the wake of the longest
government shutdown in US history.
“Those numbers were very impressive,” he said at the White House. “Other
countries in other areas are not doing well and we are doing fantastically
well.”
The construction, health care, hospitality and retail sectors added tens
of thousands of workers, another sign that the robust labor market remains a
fundamental source of strength with the US economy expected to slow in 2019.
However, the five-week government shutdown — the result of an impasse
between the president and Congress over his plans for a wall on the US-Mexico
border — was at least partly responsible for an uptick in the jobless rate
to 4.0 percent, the highest in seven months.
And hiring in December was revised sharply downward to a still-strong
222,000, but far lower than the 312,000 positions initially reported.
While the partial shutdown of the federal government between December and
January idled 800,000 government workers, the Labor Department still counted
furloughed employees — who would receive back pay — as employed, leaving
the monthly job creation numbers unaffected.
– Shutdown boosts unemployment –
But the shutdown helped to drive the rise in the unemployment rate, since
the separate survey of households used to determine joblessness counted
furloughed workers as well as contractors as unemployed.
Meanwhile, the increase in unemployment also was the result of more
workers coming off the sidelines to join the job hunt.
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That increased the size of the workforce pushed the closely-watched labor
force participation rate up to 63.2 percent, its highest level in more than
five years.
The shutdown also sent about a half million people into part-time work,
swelling this group to 5.1 million, its highest level in 16 months.
Hourly pay grew a token 0.1 percent over December but was up 3.2 percent
over January of last year, well above consumer inflation rate of 1.9 percent
in the same period, leaving American workers with greater purchasing power.
Employment in leisure and hospitality grew by 74,000 jobs for the month,
with restaurants and bars adding 32,000, while construction added 52,000
workers and hospitals and ambulatory care centers together added about 41,000
net new positions.
Economists said the robust job growth was likely more than strong enough
to keep the unemployment rate heading downward.
This could put pressure on the Federal Reserve to resume raising interest
rates later this year, even though markets now expect no more Fed hikes this
year.
Wall Street breathed a sigh of relief this month as policymakers sent
strong signals they intended to pause, meaning investors could be in for an
unwelcome surprise.
“We expect the labor market to gradually cool in 2019 but the combination
of solid payroll gains, rising wages and falling unemployment rate will
continue,” Oxford Economics said in a client note.
“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.”
Wall Street rose following the report, with stocks boosted by the jobs
numbers and a rosy report on activity in the US manufacturing sector.
The Dow Jones Industrial Average wrapped up a strong week on a high note,
gaining 0.3 percent at the close.
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