Job Report Exceeds Expectations, Reaches Historic Milestone
It was just yesterday that economists and observers were offering their best guesses for what promised to be an interesting jobs report. Complicated by the longest partial government shutdown in history, expectations had pegged the number of payrolls being added at 165,000. In actuality the report released by the Labor Department shows that the economy added upwards of 300,000 — reaching a notable milestone in the process.
As CNBC reports, the U.S. added 304,000 jobs in January, besting the recent average of 220,000. What’s more, this latest increase marks the 100th consecutive month of gains. Meanwhile the unemployment rate actually ticked up to 4% from 3.9% in December. That increase is almost assuredly due to the partial government shutdown that affected some 800,000 employees, including furloughs for more than 300,000. Interestingly, while the furloughed workers weren’t included in the payroll jobs numbers, they were factored into the unemployment rate, hence the discrepancy.
One number that economists did nail was the wage growth figure for the month. For January, wages saw a 3.2% year over year increase. This extends the economy’s 3%+ wage growth streak that has emerged as the labor market has tightened. Of course another potential factor this time around are the minimum wage increases that went into effect on the first of this year in 20 states. Average worker pay now sits at $27.56 an hour after increasing 3¢ last month.
Another wrinkle of today’s report found the December jobs numbers getting significantly revised. While the Labor Department originally stated that 312,000 jobs were added during the month, the latest report downgrades that figure to 222,000. MarketWatch notes that the change amounts to the largest monthly revision since 2010. To be fair, the revised figure still exceeds the 177,000 jobs the typical pre-report survey of economists had predicted.
In terms of which industries added the greatest number of jobs, the leisure and hospitality vertical led the way with a robust 74,000 new jobs. Other notables include construction, which added 52,000 jobs, along with the 42,000 jobs that joined the healthcare field. Elsewhere transportation and logistics companies gained 27,000 jobs and retail jobs grew by 21,000.
All in all under the circumstances this month’s jobs report turned out to be fairly impressive. At the same time, last month’s large revision may be a warning not to invest too much in these flash-released figures. Speaking of investing, it seems the markets are responding positively to the news so far, although some fear that this will lead to more Fed rate increases — but that’s a subject for another day. Right now all we can hope for is more strong reports like this one… and hopefully no more shutdowns.