January Marked the 100th Straight Month of U.S. Job Growth
- Today’s national employment report from the U.S. Bureau of Labor Statistics outpaced expectations, with 304,000 jobs added in January. The strong gain follows equally impressive December additions, though those numbers were revised down by 90,000 jobs. Nevertheless, the trailing three-month trend of 241,000 jobs created per month still beats economists’ outlooks at this point in the cycle. Over the last 12 months, the U.S. economy has added 2.81 million jobs, compared with 2.48 million jobs created the year before.
- The impact of the government shutdown is partially reflected in the unemployment rate increase from 3.9 percent to 4.0 percent, since furloughed federal employees were classified as unemployed. In addition, the number of people working part-time for economic reasons increased by about 500,000, which highlights the need for federal workers and contractors to find alternative income sources during the shutdown.
- However, while the shutdown did impact some numbers and created a delay in reporting from some industries that will lead to large revisions in February’s employment report, January’s robust increase should be received with optimism that U.S. economic growth is sustainable.
- Growth was particularly notable in the leisure and hospitality (up by 74,000 jobs), construction (up by 52,000 jobs), health care, and retail trade sectors. However, with sub-zero temperatures recorded in large parts of the country as January ended, some industries may suffer in the next U.S. jobs report. While average hourly earnings increased by 3.2 percent — or 85 cents — over the last year, the monthly increase amounted to only a 0.1 percent increase, or 3 additional cents. It is the smallest monthly increase in wages since October 2017, with growth averaging about 0.3 percent until January. The Federal Reserve may consider slowing wage growth when determining when to increase its funds rate again, as the trend suggests subdued inflation pressures.
- The labor-participation rate of prime-age workers, those between 25 and 54 years old, also edged up to 82.4 percent. The labor-participation increases over the last few months reverse early 2018 trends, when the participation rate fell. The increase reflects an influx of graduates and younger workers who are replacing retiring baby boomers. It also translates to more entry-level household formations, which will fuel demand for housing.
- The labor-participation rate among women is also increasing. That number has been slowing since the early 2000s but climbed to 76 percent last month, which is the highest since 2003.
- In projecting future job growth, the U.S. Bureau of Labor Statistics Job Opening Labor Turnover Survey released in January said that job openings fell by 243,000 in November to a five-month low of 6.9 million, which suggests slower growth ahead. However, even with a slight decline, the number of open positions is still hovering near the highest level in about 15 years. The largest increases in job openings in January were in the transportation, warehousing, and utilities industries.
- According to a new CompTIA report, the information-technology sector added 11,200 jobs in January, with hiring in IT services, custom software development, and computer systems design leading the way. Over much of the last year, three in four new tech jobs were in services, software development, or systems design.
- What does January’s job report mean for the Fed and further interest-rate hikes? While the solid jobs report is certainly a positive in light of many uncertainties, it is not likely to change the Fed’s patient stance, since much of its concern is around slowing foreign economies, particularly China and Europe; uncertainty due to Brexit; continuing trade negotiations; and the impacts of the government shutdown.
Selma Hepp is Compass’ Chief Economist and Vice President of Business Intelligence. Her previous positions include Chief Economist at Trulia, senior economist for the California Association of Realtors, and economist and manager of public policy and homeownership at the National Association of Realtors. She holds a Master of Arts in Economics from the State University of New York (SUNY), Buffalo, and a Ph.D. in Urban and Regional Planning and Design from the University of Maryland.
(Promotional photo: iStock/EmirMemedovski)