Job growth in January roared ahead despite government shutdown
The longest job-creation streak in modern U.S. history continues despite the recent government shutdown.
Businesses created 304,000 jobs in January, the Labor Department said on Friday. That number blew away expectations of many economists, who had predicted that about 165,000 jobs would be added in the first month of the year. The transportation, leisure and hospitality, construction, and health care industries led the job gains.
The unemployment rate rose slightly, to 4 percent from 3.9 percent, nudged up by the 35-day partial government shutdown that ended last month. It's the second straight month the unemployment rate has increased, but economists say it's for the right reason: More people are coming off the sidelines and looking for work.
"It's the very strength of that economy and the abundance of job openings that is pulling more individuals back into the labor force," Jim Baird, partner and chief investment officer for Plante Moran Financial Advisors, said in a note.
Furloughed federal workers were counted as employed in the report, the government said.
Average workers' wages kept growing, with hourly earnings for non-managers rising 3.4 percent from the year before. That represents the fastest pace for wage growth in nearly a decade. Average earnings for all workers grew slightly slower than in December, at 3.2 percent.
Last month was weaker than previously thought. Hiring for the two previous months were revised down to show 70,000 fewer jobs created than the total 490,000 initially estimated for November and December.
The labor market isn't flawless. The unemployment rate for black workers, which hit record lows late last year, started rising in December, and the unemployment rate for Latino workers ticked up in January because there were fewer employed people.
"When blacks and Latinos start showing weakness in the labor market it's not good--it probably means we're not adding jobs as fast as we think we are," said Bill Spriggs, chief economist for the AFL-CIO. "I'm bearish because those numbers are the canary in the coal mine."
Economists say the latest job numbers point to the economy's underlying strength. "January's strong performance quells any lingering feelings that a hiring plateau might have occurred from tariffs, the government shutdown or recent market volatility," Steve Rick, chief economist at CUNA Mutual Group, said in a note.
Do strong jobs numbers mean inflation is coming? The jury's still out. January's report "might make one worried about inflation, but, on the other hand, the continued increase in participation should lead the Fed to realize that we're not yet at a point where we'll cause the economy to overheat," said Julia Pollak, chief economist at ZipRecruiter, an online hiring platform.
After hiking interest rates four times last year, the Federal Reserve signaled this week that it would pause following several months of stock market volatility and signs of slowing global growth.