How did the shutdown affect the January jobs report?

Virginia Carson
February 3, 2019

The American economy is starting the year on a high note, with employers adding a solid 304,000 jobs in January - the 100th consecutive month of payroll growth despite a record 35-day government shutdown.

Gains occurred in a number of sectors: Leisure and hospitality added 74,000 jobs, construction 52,000, health care 42,000, retail almost 21,000 and manufacturing 13,000. Economists surveyed by The Wall Street Journal and the Dow Jones both had expected an increase of 170,000. The household survey will count furloughed federal workers as unemployed (temporarily laid off) but will count those federal employees who worked without pay during the period January 6-12 as employed.

Another factor contributing to unemployment is the labor force participation rate, which has grown by half a percent since September and hit 63.2 percent in January-the highest in more than five years.

Average hourly earnings rose 3.2% from a year earlier. That's just below the annual gain of 3.3 percent in December, which matched October and November for the fastest increase since April 2009. Mortgage rates have fallen back after almost touching 5 percent past year, but the number of Americans who signed contracts to buy homes still declined in December.

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"The respectable employment data provides something of a relief, for now at least, for members of the Federal Reserve who have been bracing for the possibility of a more serious slowdown in the US economy", said Mark Hamrick, a senior economic analyst at Bankrate.com.

Hundreds of thousands of government workers were either left idle for most of the month or required to work without pay.

Interested in Jobs Report? Government contractors and other employees not working due to the government shutdown were also counted as unemployed, though the Labor Department considered federal employees working without pay employed because they were technically at work that week. And the number of people working part time but looking for more work increased a lot last month. They were not included in the unemployment rate, either.

The strong showing represents almost a doubling of the 165,000 jobs economists surveyed by Bloomberg expected would be added to in January.

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NOGUCHI: You're right. The longer term trend is what matters.

With those factors in mind, I expect a healthy gain in payrolls of 180,000, but expect to see the unemployment increase to 4 percent.

Still, restaurants continued to hire at a faster rate than the overall economy.

President Donald Trump, a cheerleader for good economic data, celebrated the numbers by posting a tweet on February 1: "JOBS, JOBS, JOBS!"

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