U.S. Job Gains Remain Strong, Unemployment Rate Rises in January
The U.S. economy added more than 300,000 jobs for in January, the second straight month in which initial estimates topped that mark. However, revisions to the previous two months’ data lowered December’s gains from 312,000 to a still-strong 222,000, according to the Bureau of Labor Statistics.
January’s job gains of 304,000 was the second largest in the past 12 months and exceeded many economists’ estimates. An average of roughly 225,000 workers were hired each of the past 12 months – almost 50,000 more per month than the previous 12-month period from February 2017 to January 2018.
The unemployment rate increased to 4.0%, partly due to the partial government shutdown, but primarily because previously discouraged workers reentered the labor pool looking for work. Despite minor increases over the past two months, the national unemployment rate is still one of the lowest in nearly 20 years, and below what many economists consider “full employment.”
Average hourly earnings growth for all employees topped 3% for the sixth consecutive month in January, coming in at 3.2%, slightly below the previous three month average of 3.3%. The monthly gain between December and January was 0.1%, but annually, the rate grew $0.85, to $27.56.
Almost 2.7 million jobs were added in the 12 months ending January 2019 compared to just over 2.1 million for the same period a year earlier. This annual growth expanded the job base by 1.9%, the highest annual employment growth rate since April 2016. As previously mentioned, revisions to the previous two months’ numbers resulted in 70,000 fewer jobs than initially reported as November’s job gain figure was revised from 176,000 to 196,000 jobs, and December’s gains were revised from 312,000 to 222,000.
The civilian labor force (CLF) participation rate increased to 63.2%. The CLF rate has increased by 80 basis points (bps) since its nadir in September 2015, but it will likely never regain the pre-recession level of around 66%, nor the all-time high level of about 67% seen in the late-1990s. The employment-population ratio of 60.7% was up 10 bps from the previous month and 50 bps higher than January 2018.
The number of job leavers totaled 805,000 in January, an increase of 81,000 from January 2018. Job leavers are workers who quit or voluntarily leave their job and immediately began looking for new employment. The number of part-time workers for economic reasons (5.15 million in January) increased by 490,000 from December, but was up only 255,000 from January 2018. The U6 unemployment rate, which includes these part-timers and marginally attached workers, jumped to 8.1% from 7.6% in December, but was down 10 bps from one year ago.
The number of long-term unemployed workers — those out of work for 27 weeks or more — decreased 53,000 from December, to 1.25 million but was 176,000 workers less than the January 2018 figure on a seasonally adjusted basis. The number of multiple jobholders was essentially unchanged year-over-year at 7.7 million. Meanwhile, the number of discouraged workers not in the workforce (426,000) decreased by 25,000 from one year ago.
Seasonally adjusted industry job gains for January were mixed across the various industry categories, with a few very strong performances and some weak-to-moderate losses. The best performances occurred in the Leisure and Hospitality (+74,000), Education and Health Services (+55,000), Construction (+52,000) and Trade, Transportation and Utilities (+52,000) industries.
• Monthly gains in Leisure and Hospitality were almost evenly split between the two major sectors of amusements, gambling and recreation (+31,800) and accommodation and food services (+43,000), with the food services and drinking places subsector adding 36,600 jobs in January.
• The Education and Health Services industry’s January job gains were again primarily in the health care sector (+41,600), particularly the subsectors of ambulatory health care services (+22,100) and hospitals (+18,800). Social assistance added only 3,800 jobs while educational services gained 8,800 jobs for the month.
• The Construction industry was back in full swing in January with a monthly gain of 52,000 jobs. Specialty trade contractors added 34,300 jobs, split between residential specialty trade contractors (+15,100) and nonresidential specialty trade contractors (+19,200). Heavy and civil engineering construction (+10,200) and construction of buildings (+8,000) also contributed.
• The transportation and warehousing sector (+26,600) gained more than half of the Trade, Transportation and Utilities supersector’s 52,000 jobs in January. The rest was mostly retail trade (+20,800), particularly the sporting goods, hobby, book and music stores subsector (+17,400). Wholesale trade added just 4,700 jobs in January.
• The Professional and Business Services supersector’s January gain of 30,000 jobs was comprised largely of the higher-paying professional and technical services sector (+15,400), while the administrative and waste services sector added another 11,600 jobs for the month.
• The largest portion of the Financial Activities industry’s net gain of 13,000 jobs in January came from the real estate and rental and leasing sector (+9,700). Finance and insurance added 2,900 jobs in January with two-thirds of them in the insurance carriers subsector (+2,000).
• The Manufacturing industry also gained 13,000 jobs in January as durable goods (+20,000) continued to shine – particularly transportation equipment (+3,600) and semiconductors and electronic components (+3,500). Nondurable goods lost 7,000 jobs for the month, with retractions in the plastics and rubber products (-2,200), food manufacturing (-2,000) and paper and paper products (-1,700) subsectors.
• The Government sector added 8,000 jobs in January, as strong hiring at the local level (+9,000), far outpaced mild and mixed changes at the state and federal levels. (The BLS’ establishment survey counted furloughed federal employees as employed if they worked or received pay – or will receive pay – for the pay period that included the 12th of the month. Federal contractors that did not work or receive pay during that period were not counted as employed.)
• Support activities for mining (+4,600) accounted for most of the 7,000 job monthly gain in the Mining and Logging industry. Oil and gas extraction gained 1,600 jobs for the month.
• The Other Services sector (+4,000) had solid gains in the membership associations and organizations subsector (+7,900) offset by losses in the personal and laundry services (-2,300) subsector.
• The Information industry had another moderate loss for the month (-4,000), with the motion picture and sound recording industry (-2,300), telecommunications (-2,000) and broadcasting (-1,900) sectors negating gains in the data processing (+3,100) sector.