US Job Growth Surges In January Despite Government Shutdown

Channels Television  
Updated February 1, 2019
The sign of jobs is seen on the front of the US Chamber of Commerce building in Washington, DC. 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 just 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 labour market remains a fundamental source of strength with the US economy expected to slow in 2019.

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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 per cent, 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.

 Shutdown boosts unemployment 

But the shutdown was also a driver of the rise in the unemployment rate since the separate survey of households used to determine the 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.

That increased the size of the labour force, driving the closely watched labour force participation rate up to 63.2 per cent, its highest level in more than five years.

The shutdown also drove 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 per cent over December but was up 3.2 per cent over January of last year, well above consumer inflation of 1.9 per cent 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 centres 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.

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 labour market to gradually cool in 2019 but the combination of solid payroll gains, rising wages and the 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 labour 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 was up 0.4 per cent shortly before 1800 GMT.

AFP