By Denny Gulino
WASHINGTON (MaceNews) – The January jobs report Friday blew away December’s recession fears with its 304,000 addition to payrolls, 3.2% annual growth in earnings and a labor participation rate suggesting a sturdier work force.
High-end forecasts looked pessimistic in retrospect with government shutdown ripples evident, yet in the end not a factor in the survey of payroll establishments. As surprising as was the plus 300,00 payrolls total was the sharp downward revision for December, with the 90,000 subtraction rewriting the month to have instead 222,000 – still a very healthy result.
Where the shutdown did have an effect was in the survey of households from which the unemployment rate – up a tenth to 4.0% – is derived. Those employed part time for “economic reasons” increased by about one-half million to 5.1 million and “may reflect the impact of the partial federal government shutdown,” the report said.
“The impact of the partial federal government shutdown contributed to the uptick” in the unemployment rate for a relatively small increase in the number of the unemployed, to 6.5 million, according to the report.
So the most comprehensive unemployment rate, dubbed “U-6,” jumped half a point in January to 8.1%, having improved just a tenth in a year. It includes those no longer looking for work but who still want a job as well as those previously mentioned workers forced into part-time hours. Presumably the end of the shutdown means 2018’s improvements, to a U-6 rate as low as 7.5%, will be mostly recaptured in February.
The now 100-month run of improving jobs numbers raised anew the question of how the Federal Reserve can justify sitting still when income momentum is so robust. But St. Louis Fed President Jim Bullard, on CNBC, immediately after the report’s publication, stuck to his view that he hopes the latest rate raising cycle is paused if not ended.
“Now it’s time to wait and see how the economy develops,” Bullard said. “I would like to think that we’re out of the business of penciling in further increases that have to be made. I don’t think we’re in that game any more.”
Now the Fed is ready to move “in either direction” depending on the data and, he said, there “wouldn’t be any presumption now any more that we’re going to move in one direction or the other.”
Bullard, currently a voter on the Federal Open Market Committee, characterized the jobs report as strong, but in the context of December’s downward revision, not definitive. “My immediate reaction is this is very strong for this month but you’ve got this big revision for last month and you’ve got some noise in this data,” he said. So, “Maybe” the report is a “backward looking signal.”
President Donald Trump, later in the day, told reporters of the jobs report, “It wasn’t shocking to me” because the economy is doing very well.
Despite the tenth strengthening of the labor participation rate to 63.2%, up half a point in a year, there was a slight decrease in January’s civilian labor force, to 163,229,000, after seasonal adjustment. Those listed as employed also went down, by 251,000 to 156,694,000. Those unemployed went up 241,000 to 6,535,000. Those counted as “not in the labor force” is down 639,000 in a year.
Those holding multiple jobs held about steady in January, down just 2,000 to 7,749,000.
January’s jobs report showed unusually large increases in two categories. January’s employment in leisure and hospitality showed an outsized gain of 74,000, a category that on average has risen about 34,000 jobs a month in the past year. Construction rose an above-trend 52,000 in the cold-weather month, and had gone up an average of about 28,000 a month in the past year.
Health care was closer to trend, up 42,000, having shown an average of about 31,000 additional jobs a month for a year.
Employment in transportation and warehousing bounced back from little chance in December to a 27,000 increase in January, close to the past year’s monthly average of about 18.000.
Retail trade rose 21,000, having moved very little over the past year. Oil drilling support jobs continued to increase, with its category of mining up 7,000 for the month and 64,000 in a year.
Those unemployed six months or more was about the same at 1.3 million, 19.3% of all unemployed.
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This story was updated Friday afternoon and Saturday morning.