Hiring boomed in January
The US economy added 304,000 jobs in January, a surprisingly strong month of hiring as employers continue to bring in new workers.
January was the 100th straight month of job gains. The Labor Department said the government shutdown that lasted more than a month had “no discernible impacts” on hiring and wages, but it did contribute to the uptick in unemployment. The unemployment rate rose slightly to 4%.
Another possible ripple effect from the shutdown: The number of people working part time for economic reasons jumped by about 500,000, after many months of declining. The Labor Department said that increase might be attributable to private-sector contractors who lost work during the lapse in funding.
Some of the unexpectedly large jump in hiring appeared to have been pulled forward from December, which was revised down from 312,000 jobs to 222,000. Still, the average for the last three months is now 241,000 jobs — which represents an acceleration in job growth, not a slowdown, as many have been predicting.
The current economic recovery is now only five months away from becoming the longest expansion ever, a record set in the 1990s, when the economy went 120 months in between recessions, as defined by the National Bureau of Economic Research.
The continued hot pace of job growth is evidence that people who may have been sidelined by the Great Recession more than a decade ago are still coming off the sidelines. Labor force participation grew slightly, to its highest level since 2013.
Employment gains were led by the leisure and hospitality sector, which has added 410,000 jobs over the past year. That indicates that consumers have been spending freely on recreation, as paychecks have grown and the unemployment rate has sunk.
Retail jobs, however, have stayed essentially flat over the past year as e-commerce — usually represented in the transportation and warehousing category — has taken over an increasing share of employment in the sector.
Manufacturing, especially in durable goods, continued what is now a two-year-long stretch of healthy growth. That comes despite mounting fears that President Donald Trump’s trade war is increasing prices and adding to uncertainty.
“When you look at the inflation data, you haven’t seen any downstream impacts on consumers,” says Curt Long, chief economist with the National Association of Federally-Insured Credit Unions. “Even though tariffs are potentially disruptive for business confidence, they haven’t reached a level that would seriously damage the overall economy.”
Average hourly earnings rose 0.1% from January, which is slower than the last few months, but still 3.2% over the year — well above inflation. Workers have seen a streak of relatively robust gains as employers have had to pay more to attract them.
On Thursday, the Employment Cost Index — a broader measure of earnings — showed that total compensation rose more in 2018 than it had since 2008.
Stock market futures rose on the news. The Federal Reserve said this week that it would hold off on interest rate hikes for at least the next several months, giving Wall Street the best of both worlds: Good economic news, and less fear that it will lead to the Fed tightening the money supply.
“This is the sweet spot for investors right now,” Long said.