January 2019 Jobs Report

The government shutdown put an $11 billion hole in the U.S. economy, a third of which will never be recovered. However, that does not appear to have affected the rate of hiring. According to the Bureau of Labor Statistics, total nonfarm payroll increased by 304,000 jobs in January. This smashed economists’ expectations of 165,000 jobs added. Job gains occurred in construction, leisure and hospitality, health care and transportation and warehousing.

One thing that the government shutdown does seem to have had an effect on is the unemployment rate, which edged up to 4 percent. Because federal workers will all receive back pay for the days the government was closed, they were counted as having been on government payrolls in January, even if they weren’t actually on the job. Most government contractors, however, won’t receive back pay. If they didn’t report into work, they counted towards the unemployment figure, along with other private-sector workers who were laid off (or weren’t hired) because of the shutdown.

The unemployment uptick, though expected, was somewhat disappointing. Another disappointing result of this jobs report is that December’s ultra-impressive report was revised down from 312,000 to 222,000 jobs. There was good news in wage growth, though, coming in at 3.2 percent over this time last year.

In fact, the overall health of the job market is well intact. Unemployment claims are at a near 50-year low. Wages and salaries rose 3.1 percent in the final three months of 2018, compared to a year earlier, which is the highest growth since the Great Recession ended in 2009. Even sectors which had previously struggled, like manufacturing and retail, added jobs in 2018.

“This jobs report is showing no evidence of an economy showing, certainly not falling into recession,” said Michelle Meyer, chief United States economist for Bank of America Merrill Lynch. “It’s still a tight labor market. Employers are still actively [hiring], and with wages ticking up, it looks like workers are getting some more bargaining power.”