Washington — US hiring in January topped all forecasts while wage gains cooled and the government shutdown pushed up the unemployment rate, signalling job gains remain robust without major inflation pressures that would worry US Federal Reserve officials.
Nonfarm payrolls increased by 304,000, the most in almost a year, after a downwardly revised 222,000 gain the prior month, a labour department report showed on Friday. The median estimate in a Bloomberg survey called for an increase of 165,000, following an initially reported 312,000 in December.
Average hourly earnings rose just 0.1% from the prior month, missing estimates and the smallest increase since late 2017. The annual gain of 3.2% matched forecasts though was down from an upwardly revised 3.3% in December. The jobless rate increased to 4%, reflecting the shutdown, as the number of unemployed on temporary layoff rose by 175,000, many of them federal workers, according to the department.
Stock futures erased losses, treasuries briefly dropped then regained some ground and the dollar spiked higher before moving lower.
The figures, which included the highest participation rate since 2013, indicate the labor market remains in a sweet spot where companies are adding workers and boosting pay without suggesting any urgent need for the Fed to end its newfound patience on holding rates steady. Policy makers this week indicated they won’t hike again until inflation accelerates, even with the economy already roughly at the central bank’s goal of full employment.
“The trend looks very favorable in terms of momentum of job growth,” said JPMorgan Chase chief US economist Michael Feroli. “Right now we don’t have an inflation problem,” he said, though “if we keep getting these strong job numbers eventually that looks like a possibility.”
Even so, Fed officials will “probably sit on their hands” for six months or longer, he said.
The hiring and wage gains underscore resilient demand for labour, and support for consumer spending, even as the shutdown furloughed government workers, heightened uncertainty and weighed on economic activity. At the same time, economists had cautioned the data would contain more distortions than usual.
Shutdown effects
The Labor Department found “no discernible impacts” of the shutdown on the establishment survey’s January estimates of employment, hours or earnings, acting labour-statistics commissioner William Wiatrowski said in a statement. Still, the shutdown is likely to have hit some private industries, and some federal workers were probably misclassified as employed but absent from work instead of unemployed on temporary layoff, Wiatrowski said.
With Kristy Scheuble, Benjamin Purvis, Jeremy Herron and Sophie Caronello.
Bloomberg
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