USA adds 304K jobs in January

USA adds 304K jobs in January

USA employers added 304,000 jobs in January, soaring past Wall Street's expectations for an increase of 165,000 jobs, seemingly brushing off a 35-day government shutdown as investors braced for mixed results. Average hourly wages rose 3.2 percent in January from a year earlier.

The numbers released Friday by the Department of Labor represent the largest monthly jobs increase in almost a year and continue a long running trend of 100 consecutive months of growth. The result is the unemployment rate probably should have been even higher - maybe 4.1 percent.

The government shutdown saw about 380,000 workers furloughed but President Donald Trump signed a law guaranteeing these employees back pay. That left the annual increase in wages at 3.2 percent.

Employment in construction and health care followed with 52,000 and 42,000 new jobs respectively.

The partial government shutdown has delayed the release of a range of government data about the economy, including statistics on housing, factory orders, and fourth-quarter growth. Equity markets may continue to stumble as they try to decipher the global policy landscape, but the underlying Main Street economy in the United States remains solid.

How did the U.S. government shutdown impact jobs numbers? Job growth was boosted by hiring at construction sites, retailers and business services as well as at restaurants, hotels and amusement parks.

MARTIN: So explain how it seems to indicate that the government shutdown, which affected 800,000 federal workers, that had virtually no effect on the job market. Those factors have led many economists to forecast slower growth this year compared with 2018.

"A tight labour market and healthy wage growth support economic growth, and today's data should buoy consumer spending and could boost the stock market", Kully Samra, analyst at USA investment bank Charles Schwab said. Workers earned an average $27.56 an hour last month.

Retail jobs, however, have stayed essentially flat over the past year as e-commerce - usually represented in the transportation and warehousing category - has taken over an increasing share of employment in the sector. "It's still a tight labor market".

The unemployment rate increased to 4.0% from 3.9% in January, as Federal employees furloughed by the government shutdown are usually recorded as unemployed in the Household Survey.

He said: "It's also possible that today's strong data will be among the last extremely strong employment reports". They are counted as employed because they will receive back pay for the period.

Annual revisions to payroll data showed the level of employment in March of previous year was 1,000 lower on a seasonally adjusted basis than had been reported. 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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