U.S. Added 304,000 Jobs In January; Shutdown Boosted Unemployment To 4 Percent

Feb 1, 2019
Originally published on February 1, 2019 11:01 am

Updated at 9:27 a.m. ET

Job growth picked up for the 100th consecutive month in January even as hundreds of thousands of federal workers were furloughed during the partial government shutdown, the Labor Department said Friday.

Employers added 304,000 jobs last month — topping analysts' expectations and the 223,000 average monthly gain in 2018. The string of job growth underscores the long economic expansion since the Great Recession.

The unemployment rate inched up to 4 percent, and the shutdown contributed to the uptick, the department said.

Don't see the graphic above? Click here

Private economists had expected an increase of about 170,000 jobs and the unemployment rate to be unchanged at 3.9 percent.

In December, the economy added a revised 222,000 jobs. That was less than the blockbuster 312,000 first reported, and it followed the revised 176,000 jobs added in November.

Gains occurred in a number of sectors: Leisure and hospitality added 74,000 jobs, construction 52,000, health care 42,000, retail nearly 21,000 and manufacturing 13,000.

Wage growth held steady in January. Average hourly earnings grew 3.2 percent over the past 12 months — matching December's increase. Workers earned an average of $27.56 an hour last month.

The 35-day partial government shutdown, which ended Jan. 25, affected hundreds of thousands of federal workers and contractors. But because of a bill signed into law by President Trump on Jan. 16, federal employees who were furloughed or required to work without pay were guaranteed back pay after the shutdown ended. Those workers were counted as employed, the Bureau of Labor Statistics said.

Still, the Labor Department said that the number of people employed part time who wanted to work full time jumped by about 500,000, to 5.1 million, in January. "Nearly all of this increase occurred in the private sector and may reflect the impact of the partial federal government shutdown," it said.

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.

The Federal Reserve, which keeps a close eye on the employment numbers, said Wednesday that the labor market has continued to strengthen since December. The central bank, which raised rates four times last year, did not raise rates and cited "global economic and financial developments" and low U.S. inflation as reasons to be patient before changing rates again.

"The respectable employment data provides something of a relief, for now at least, for members of the Federal Reserve who have been bracing for the possibility of a more serious slowdown in the U.S. economy," said Mark Hamrick, a senior economic analyst at Bankrate.com.

Copyright 2019 NPR. To see more, visit https://www.npr.org.

RACHEL MARTIN, HOST:

The hundreds of thousands of government workers who were furloughed or working without pay did not have a negative effect on the job market. The Department of Labor reports this morning that employers in this country added 304,000 jobs last month. NPR's Yuki Noguchi is in the studio for more.

Hi, Yuki.

YUKI NOGUCHI, BYLINE: Good morning.

MARTIN: What do these numbers show?

NOGUCHI: Well, as you mentioned, hiring was, surprisingly, very strong - 304,000. That's way beyond what analysts were expecting. And a lot of the hiring was in restaurants and hotels, construction and health care. But the unemployment rate was 4 percent, which was a small hike from the 3.9 percent level in December.

MARTIN: So explain how it seems to indicate that the government shutdown, which affected 800,000 federal workers, that had virtually no effect on the job market.

NOGUCHI: Yeah, it's a little confusing. It didn't affect the numbers because of some technicalities of who the government considered unemployed in January. So there are two separate surveys. And they classified furloughed workers differently. One of them is the payroll survey, which measures hiring. And that one counted furloughed workers as employed, even if they were sitting at home and not collecting a paycheck. But since Congress agreed to pay these workers retroactively, they were employed. But in the other survey, which measures the jobless rate, a lot of these same workers were counted as unemployed.

MARTIN: So what kind of impact did that have on the jobless rate in January?

NOGUCHI: It did have an effect but a small one. You saw the unemployment rate go to 4 percent. That's an uptick of 1/10 of a percentage point. But that effect is likely temporary.

MARTIN: So does that mean the job market, basically, escaped largely unscathed because of the shutdown last month?

NOGUCHI: Not entirely - the Congressional Budget Office this week said the shutdown reduced federal spending and cut into economic growth. Now, that would definitely hit federal contractors, who make up the biggest segment of those that do government work. They don't get paid back after the furlough ended. And some of them were laid off. That might help explain why we saw a spike earlier this week in initial claims for unemployment insurance. And the number of people working part time but looking for more work increased a lot last month. Probably, those are government workers and contractors looking to bridge that period with temporary work. But then, you know, Rachel, the overall context is that unemployment is still very low.

MARTIN: Right.

NOGUCHI: Private sector can't fill jobs. And so we'll have to wait to see more data. But the government shutdown caused, you know, some delays in other economic reports. So we'll have to wait to see what those say.

MARTIN: So January - clearly, a big month for hiring. How does that fit into the overall employment trajectory?

NOGUCHI: You're right. The longer term trend is what matters. And this latest data doesn't actually change the monthly average very much. January marks the 100th straight month of job growth. That's a very long run of growth. The unemployment rate is so low at this point that there are just fewer people who don't already have jobs. And that's great news for workers because that lack of available workforce means that employers have to pay more. And last month, you saw average hourly earnings increase by an annual rate of 3.2 percent. That's considered pretty strong. So we may start to see hiring level off but wages continue to increase.

MARTIN: All right. NPR's Yuki Noguchi for us this morning with those new jobs numbers. Thanks so much, Yuki.

NOGUCHI: Thank you, Rachel. Transcript provided by NPR, Copyright NPR.