January Job Gains Impress but Revisions Bring Total U.S. Growth Down

The U.S. economy started 2020 on a solid note. According to the Bureau of Labor Statistics, the U.S. added 225,000 jobs in January, the second-strongest monthly gain in the past year. While the national unemployment rate ticked up slightly to 3.6%, the figure remains near the 50-year low attained in September 2019.

However, revisions and re-benchmarking to previous employment estimates brought down total employment levels by about 500,000 jobs in 2019, while total job gains for the year were revised down by 12,000 positions (to 2.096 million).

As of January, the nation’s monthly positive gain streak continued to 112 consecutive months, or more than nine years. However, the average monthly growth rate continues to trend downward, averaging 171,000 jobs in the past year. In comparison, the 12-month average for monthly job gains through January 2019 was bigger at 205,170 jobs per month, but the average unemployment rate that year was higher at 3.9%. In the year-ending January 2018, the average monthly employment gain was comparable at 170,400 jobs.

Average hourly earnings growth for all employees was 3.1% in January and has averaged 3.3% for the year. The monthly wage figure increased $0.07 between December and January, and was up $0.86 from January 2019, to $28.44. Wage growth has been slowly creeping up, as it averaged at 3% through January 2019 after a showing of 2.6% the previous two years.

A little less than 2.1 million jobs were added in the 12 months ending in January 2020 compared to almost 2.5 million for the same period one year ago. This annual growth expanded the job base by 1.4%, slightly above the post-revision12-month average of 1.3%. While the January rate is 30 basis points (bps) below the growth rate from January 2019, it is even with the rate from January 2018 (1.4%). Revisions to the previous two months’ numbers resulted in 7,000 more jobs than initially reported as November’s job gain figure was revised from 256,000 to 261,000 jobs, and December’s gains were revised from 145,000 to 147,000.

The civilian labor force (CLF) participation rate has been improving slightly in the past few months. The reading was 63.4% in January and has averaged 63.1% for the past year. The employment-population ratio of 61.2% was up 50 bps from January 2019. The total number of unemployed (5.892 million) is down about 624,000 from last year, and the number of people not in the labor force who currently want a job has fallen from 5.2 million last January to 4.9 million currently. Compared to last month, the number of unemployed increased by 139,000, bumping up the unemployment rate to 3.6% as the civilian labor force increased by 50,000 from December.

The number of job leavers increased by 20,000 from last year to 836,000 but was up only 7,000 from December, as the proportion of unemployed due to leaving jobs increased to 14.2% of all unemployed persons. Job leavers are workers who quit or voluntarily leave their previous job and immediately began looking for new employment. The number of part-time workers for economic reasons (4.18 million in January) fell by 923,000 from January 2019, and the number of part-time workers for non-economic reasons increased by 1.2 million to 22.2 million. The U6 unemployment rate, which includes part-timers for economic reasons and marginally attached workers, ticked up 20 bps to 6.9% from December, but has remained below 7% since August.

The number of long-term unemployed workers (out of work for 27 weeks or more) fell by 93,000 from January 2019 to 1.17 million, and the average duration of unemployment rose to 19.9 weeks from 19.4 last year. The number of multiple jobholders increased by 334,000 year-over-year to 8.08 million. Meanwhile, the number of discouraged workers not in the workforce (350,000) dropped by 76,000 from one year ago.

Industry Focus

Monthly job gains by industry for January were spread throughout several industries, and only the Manufacturing industry suffered significant job losses for the month. The strongest gains were in the Education & Health Services (+72,000), Construction (+44,000), Leisure and Hospitality (+36,000), and Trade, Transportation & Utilities (+27,000) industries.

• The Education and Health Services industry’s leading gain of 72,000 jobs was divided among the educational services (+24,900) and health care services (+47,200) sectors. Health care gains were particularly strong in the ambulatory health care services (+22,500) and social assistance (+11,700) subsectors.

• The Construction industry had a strong month with an additional 44,000 jobs added in the trade industry. Specialty trade contractors added 35,000 jobs, and that gain was almost evenly divided between residential (+17,800) and non-residential (+17,200).

• The Leisure and Hospitality industry’s gain of 36,000 jobs in January was focused on the food services and drinking places subsector (+24,400) while the arts, entertainment, and recreation subsector contributed another 14,200 jobs.

• The Trade, Transportation and Utilities sector had a solid month for gains with 27,000 jobs added. However, all of that was in the transportation and warehousing sector (+28,300), as retail trade’s loss of 8,300 jobs offset a gain of 8,400 positions in wholesale trade.

• The Professional and Business Services industry gained 21,000 jobs in January, primarily in the higher-paying professional and technical services sector (+12,800). The administrative and waste services sector gained 8,600 jobs for the month, all in the services to buildings and dwellings (+9,500) subsector.

• The Government sector’s 19,000-job gain in January was due to strong gains at the local level (+20,000 jobs), as state government losses of 13,000 positions cancelled out gains of 12,000 jobs in Federal employment.

• The Other Services sector gained a respectable 14,000 jobs in January with solid contributions among all its three subsectors – membership associations and organizations (+6,200), repair and maintenance (+4,100), and personal and laundry services (+3,400).

• The Information industry’s 5,000-job gain in January was entirely in the data processing, hosting and related services subsector (+5,300), as the remaining subsectors provided much milder results.

• The Mining and Logging industry was a net zero for the month as losses in the support activities for mining (-2,300) dampened modest gains in other subsectors.

• The Financial Activities industry lost 1,000 jobs for the month, with gains in the finance and insurance sector (+1,700) offset by losses in real estate and rental and leasing (-2,400).

• The Manufacturing industry saw payrolls shrink by 12,000 jobs in January, but unlike last month, the losses were primarily in durable goods (-11,000), while nondurable goods lost only 1,000 jobs in January. The motor vehicles and parts subsector (-10,600) made up most of those losses.