January NFP +304K, Unemployment 4.0%

The January jobs report is out. The US economy created 304,000 net new jobs last month. Revisions took 70,000 jobs out of previous months. The unemployment rate ticked up to 4.0%.

The labor force participation rate is at its highest since September 2013. Despite the uptick in the unemployment rate, the jobs-to-population ratio is now at its highest since December 2008. In other words, people re-entering the jobs market made up the difference.

From CNBC:

The unemployment rate ticked higher to 4 percent, a level where it had last been in June, a likely effect of the shutdown, according to the department. However, officials said federal workers generally were counted as employed during the period because they received pay during the survey week of Jan. 12. On balance, federal government employment actually rose by 1,000.

Economists surveyed by Dow Jones had expected payrolls to rise by 170,000 and the unemployment rate to hold steady at 3.9 percent.

In all, it was a powerful performance at a time when economists increasingly have said they expect growth to slow in 2019. January marked 100 months in a row of positive job creation, by far the longest streak on record.

The news was not all good, though, as data revisions pushed previous numbers lower.

December’s big initially reported gain of 312,000 was knocked all the way down to 222,000, while November’s rose from 176,000 to 196,000. On net, that took the two months down by 70,000, bringing the three-month average to 241,000. That’s still well above the trend that would be common this far into an economic expansion dating back 9½ years.

For the full year of 2018, the average monthly gain was 223,000.

A separate measure of unemployment that takes into account discouraged workers and those holding part-time positions for economic reasons jumped to 8.1 percent from 7.6 percent, with the January reading being around where it was in January 2018.

(…)

The job creation saw muted wage growth, with average hourly earnings rising just 3 cents on the month, or 0.1 percent, well below the 0.3 percent expected gain. On a year-over-year basis, though, that still amounted to a 3.2 percent increase, consistent with the past few months and around the highest levels of the recovery.

A Bureau of Labor Statistics official estimated that the shutdown had “no discernable impacts” on the ability to make estimates, though there was some effect on the numbers otherwise.

Some charts.

Nonfarm payrolls.

Change in Nonfarm payrolls.

Labor force participation rate.

Prime working age participation rate.

Unemployment rate.

Posted by on February 1st, 2019 at 8:42 am


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