The U.S. economy blew away expectations for employment growth in January, adding 304,000 jobs amid the government shutdown and ongoing trade turmoil, and easing fears that a deep slowdown — or even a recession — is on its way.
Danielle Paquette and Heather Long of The Washington Post had the news:
January marked the 100th straight month of job gains, an unprecedented run that began in 2010. The shutdown did not appear to dampen private-sector hiring, but the unemployment rate crept up to 4 percent, the Labor Department said Friday, capturing the furloughed federal employees who temporarily stopped clocking in. Average hourly wages grew at an annual pace of 3.2 percent, with lower-wage workers seeing some of the biggest increases.
All told, the outlook for the U.S. economy has improved in recent days as the shutdown ended, President Donald Trump sounded more eager to strike a permanent trade truce with China and the Federal Reserve hit pause on further interest-rate increases.“It’s full speed ahead for the economy this year if today’s blockbuster report on new jobs is to be believed, and we think it is,” said Chris Rupkey, chief financial economist at MUFG Union Bank, in a note to clients. “U.S. companies have not let up one bit on their hiring in response to risks out there in the world economy, chiefly China and Europe, the Federal government shutdown, the economic war with China.”
Lucia Mutikani of Reuters reported that the unemployment rate was its highest in seven months:
The Labor Department said its closely watched monthly employment report on Friday showed no “discernible” impact on job growth from a 35-day partial government shutdown, while acknowledging it was unable to quantify the effect on private industry.
But the longest shutdown in history, which ended a week ago, pushed up the unemployment rate to a seven-month high of 4.0 percent. 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.
The brisk pace of hiring suggested still strong momentum in the economy, a theme that was also underscored by a separate report showing a pickup in manufacturing activity in January.
Wage gains, however, slowed, pointing to tame inflation.
Ben Casselman of The New York Times reported that the December adjustment was larger than normal:
The Labor Department did revise downward its estimate of December hiring by 90,000 jobs, an unusually large adjustment. But the strong growth in January, combined with upward revisions to earlier months, meant that the pace of hiring, averaged over six months, actually rose.
That combination of strong hiring and modest wage gains has put the economy on a strong, sustainable footing. More jobs means more income for consumers, which leads to more spending, and in turn more hiring.
“The virtuous cycle continues,” said Michael Gapen, chief United States economist for Barclays. “What’s kept this recovery going, what’s kept the U.S. economy so resilient to all the things that have clouded the outlook, is a virtuous cycle of a continuously growing U.S. labor market.”
