January Employment Surges Again
Payroll employment surged for the second straight month, as private employers added 304,000 jobs in January, the Bureau of Labor Statistics reported Friday.
BLS reported the unemployment rate ticked up to 4 percent in January, the result of more workers trying to enter the workforce and temporary effects of the partial government shutdown, which occurred during the reporting period. BLS noted, however, that the shutdown, which lasted until Jan. 25 and directly affected 800,000 government workers, had “no discernable impacts” on the report.
BLS reported job gains occurred in leisure and hospitality, construction, health care and transportation and warehousing. It revised up November’s report from +176,000 to +196,000, but reported down December’s gain of 312,000 to 222,000, for a net loss of 70,000 from previously reported.
The report said the labor force participation rate, at 63.2 percent, and the employment-population ratio, at 60.7 percent, changed little over the month; both measures were up by 0.5 percentage point over the year.
“The job market remains exceptionally strong,” said Mike Fratantoni, chief economist with the Mortgage Bankers Association. “Although the partial government shutdown may have temporarily increased the unemployment rate, this pace of job creation will continue to support higher wages, which will in turn support strong housing demand.”
Fratantoni noted with the Fed last week highlighting that it would remain “patient” with respect to any future interest rate increases, “mortgage rates are likely to remain stable. Stable rates and growing wages are a good combination for potential homebuyers.”
“While financial markets remain volatile, the real economy and labor market continue to remain strong, which should benefit housing,” said Mark Fleming, chief economist with First American Financial Corp., Santa Ana, Calif. “The volatility in financial markets in January, primarily based on concerns about a global economic slowdown, tariff talks and domestic monetary policy tightening, has benefitted the housing market as it has inspired some opportunistic home buyers into action before the start of the busy spring home buying season.”
Sara House, senior economist with Wells Fargo Securities, Charlotte, N.C., noted while the report came in twice as high as consensus expectations, revisions from previous months kept averages at the expected 241,000 per month jobs.
“Overall, we expect the trend in hiring to slow over the course of this year as economic growth moderates and the tight state of the labor market makes it difficult for firms to fill vacant positions,” House said. “Yet the unemployment rate should continue to move down while wage growth should strengthen further, meaning it is too early to write off additional Fed tightening later this year.”
BLS reported the average workweek for all employees on private nonfarm payrolls was unchanged at 34.5 hours in January. In manufacturing, both the workweek and overtime decreased by 0.1 hour to 40.8 hours and 3.5 hours, respectively. The average workweek for production and nonsupervisory employees on private nonfarm payrolls held at 33.7 hours.
The report said average hourly earnings for all employees on private nonfarm payrolls in January rose by 3 cents to $27.56, following a 10-cent gain in December. Over the year, average hourly earnings have increased by 85 cents, or 3.2 percent. Average hourly earnings of private-sector production and nonsupervisory employees increased by 3 cents to $23.12 in January.
