U.S. Economy Added 304,000 Jobs in January; Unemployment at 4%

The Labor Department released its monthly estimate of hiring, unemployment and wages for January on Friday morning. The report provided an important snapshot of the American economy.

  • 304,000 jobs were added last month. Economists had expected a gain of about 172,000.

  • The unemployment rate rose to 4.0 percent, from 3.9 percent.

  • Average earnings rose 3 cents per hour in December, and were up 3.2 percent from a year earlier.

  • December’s job growth was revised sharply downward. The government now says employers added 222,000 jobs in the final month of the year, down from an earlier estimate of 312,000.

The government shutdown may have hurt the economy, but there’s no sign it slowed down the United States’ record-setting job market.

January’s growth means that American employers have added jobs for 100 consecutive months, extending a record run. The unemployment rate is near a multidecade low, and wages — long a weak point — are rising.

The shutdown idled hundreds of thousands of federal workers for much of January, and left hundreds of thousands of others working without pay. Ripple effects hit everyone from unpaid government contractors to Washington lunch spots that lost business.

But the disruption doesn’t appear to have dissuaded private-sector employers from continuing their strong pace of hiring. And furloughed federal workers counted as employed for the purposes of government statistics.

A Transportation Security Administration worker at La Guardia Airport in New York during the partial government shutdown. The job gains in January indicated that private-sector employers shrugged off the shutdown’s impact.CreditKarsten Moran for The New York Times

Even before the lapse in funding, economists were growing nervous that the United States’ decade-long expansion could be nearing its end. The shutdown not only added to those fears, it also shuttered the Commerce Department, which produces a lot of the data forecasters rely on. (The Labor Department, which produces the jobs report, stayed open.)

But if companies are getting nervous, that isn’t yet leading them to hold off on hiring.

“This jobs report is showing no evidence of an economy showing, certainly not falling into recession,” said Michelle Meyer, chief United States economist for Bank of America Merrill Lynch. “It’s still a tight labor market. Employers are still actively looking for jobs, and with wages ticking up, it looks like workers are getting some more bargaining power.”

The monthlong shutdown put an $11 billion dent in the economy, according to the Congressional Budget Office. Some private estimates put the costs even higher.

That damage was hard to see clearly in Friday’s job figures, however. Federal workers will all receive back pay for the days the government was closed, whether or not they were required to work. As a result, the official figures counted all of them as having been on government payrolls in January, even if they weren’t actually on the job.

Government contractors generally won’t receive back pay, so if they didn’t work, they weren’t counted. Ditto for other private-sector workers who were laid off (or weren’t hired) because of the shutdown. But most economists expected those effects to be small in the context of an economy that employs more than 150 million people. Sure enough, private employers added nearly 300,000 jobs last month.


The shutdown does help explain why the unemployment rate ticked up to 4 percent in January. Unlike the monthly hiring figures, which come from a survey of employers and are based on their payrolls, the unemployment rate is based on a survey of households. In that survey, 175,000 people reported themselves as being unemployed because of a “temporary layoff” — a total that included government workers.

“Where’s your shutdown impact? There it is,” said Brett Ryan, an economist for Deutsche Bank in New York. “It just showed up in the unemployment rate.”

It is possible, of course, that hiring would have been even stronger absent the shutdown.

“It’s a hard counterfactual to figure out,” said Julia Pollak, an economist for the online job site ZipRecruiter.

Economists have become increasingly concerned in recent months about a range of possible threats to the United States economy. Growth has slowed in Europe and China; trade tensions are threatening the American manufacturing sector; stock market jitters could make consumers less likely to spend; and the shutdown, of course, could erode confidence among both consumers and businesses.

None of that, however, has yet affected the job market.

“There’s a caution or concern in people’s voices, but it hasn’t turned into action,” said Teresa Carroll, executive vice president for Kelly Services, a staffing firm. “Anybody in a hiring situation in a company is probably waiting for that next shoe to drop, but it doesn’t mean they’re stopping.”

It isn’t just Friday’s data that looked strong. Claims for unemployment insurance recently hit a nearly 50-year low. Paychecks are growing — data released Thursday showed that wages and salaries rose 3.1 percent in the final three months of 2018 compared to a year earlier, the best mark since the recession ended a decade ago. And employers report in private surveys that they plan to keep on adding workers — at least if they can find them.

“The underlying foundation hasn’t changed,” said Becky Frankiewicz, president of ManpowerGroup North America, a staffing firm. She said what she was hearing from clients was “nice, robust optimism continuing around hiring.”

As the unemployment rate has fallen, companies have had to work harder to find workers. Ms. Frankiewicz said companies are increasingly offering training, rethinking job requirements and letting employees work remotely. They are also raising pay — a factor that may be drawing more workers off the sidelines. The labor force grew by nearly half a million people in January.

“If wages are rising, that gives a greater incentive for folks to come back into the labor force and look for jobs,” Ms. Meyer said.

Earlier this week, the Federal Reserve signaled that it was pressing “pause” on plans to continue raising interest rates this year. Jerome H. Powell, the Fed’s chairman, said “the case for raising rates has weakened somewhat” because of low inflation and slowing global growth.

Friday’s report seemed to offer a sharp counterpoint to those comments. The economy, at least in the United States, still seems strong, and wage growth has been picking up.

Still, economists said the report was unlikely to lead the Fed to reverse course yet again.

“This is just one piece of news,” Mr. Ryan said. “They’re going to have to see several more of these before they’re comfortable hiking again.”

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