USA job growth jumps; unemployment rate rises to 4.0 percent

US employers added 304,000 jobs in January, soaring past expectations

The U.S. economy added 304,000 jobs in January while the unemployment rate crept up slightly to 4 percent, according to data released Friday by the Bureau of Labor Statistics. Wages grew 3.2 percent year-over-year to a rate of $27.56 to sustain a 10-month streak above 3 percent. Last year saw more job creation than the previous two years, with 2.6 million new jobs over the course of the year compared with 2.2 million in 2017 and 2.3 million in 2016.For the full year of 2018, the average monthly gain was 223,000.

But the US economy is still facing the reduced impact of tax cuts and weakening growth in China and Europe.

According to the Labor Department, the government shutdown did not adversely impact the higher jobless rate. Federal employees on furlough during the partial government shutdown were counted as employed in the establishment survey because they worked or received pay (or will receive pay) for the pay period that included the 12th of the month.

North said the rate is almost a flawless number, "not too hot" so as to spark fears of inflation, but "not too cold" to raise concerns about wage stagnation.

Private sector payrolls were up by 296,000, with big increases seen in the construction and leisure and hospitality industries.

The strong job market, though, is encouraging more people who weren't working to begin looking.

How did the United States government shutdown impact jobs numbers?

Nonfarm payrolls jumped by 304,000 jobs last month, the largest gain since February 2018, the Labor Department said.

China's economy is decelerating sharply, the United Kingdom is struggling to negotiate its exit from the European Union, and Italy's economy has entered recession, exacerbating fears that slower global growth will cut into US exports.

The better-than-expected USA jobs report will likely have a positive effect on The Dow Jones.

Job growth increased broadly in January.

The workers who took part-time jobs during the shutdown likely have given them up, so that number should fall in next month's jobs report.

"Blockbuster job number distorted by workers forced to accept part time employment to make ends meet during government shutdown".

During the recent government shutdown, economists thought that hundreds of thousands of federal workers placed on furlough for more than a month may artificially impact the jobs numbers. The importance of the continued rise in work and labor market participation can not be overstated. The wage number is long overdue, and the jobs number continues to outpace the underlying demography. Over-the-month job gains occurred in durable goods (+20,000), while employment in nondurable goods changed little (-7,000).

Swonk cautioned that some quirks likely inflated last month's job gain.

Construction employment rose by 52,000 in January. The views expressed in this column are the author's own and do not reflect those of Berenberg Capital Markets, LLC.

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