How did the shutdown affect the January jobs report?

Share

That effect should unwind by the February jobs report.

Manufacturing gained 13,000 jobs and mining added 7,000.

The Labor Department said Friday the economy added 304,000 jobs last month, reaching the milestone of 100 straight months of employment gains.

The string of job growth underscores the long economic expansion since the Great Recession.

Before the jobs report had been announced, economists polled by MarketWatch had predicted that the country would add around 172,000 jobs. The unemployment rate rose to 4 percent, its highest level since June, which the Labor Department attributed to the impact of the shutdown.

December was revised down from the originally reported 312,000 to 222,000.

The government said the level of employment in March of previous year was 1,000 lower on a seasonally adjusted basis than it had reported.

Average hourly earnings rose 0.1% from January, which is slower than the past few months, but still 3.2% over the year - well above inflation. Today's employment report from the Bureau of Labor Statistics (BLS) will capture some of the disruption caused by the shutdown, but not all, due to differences in methodology of the two primary surveys that inform the jobs report.

Overall, healthcare employment increased by 368,000 jobs over the past year, according to the bureau. Hours and earnings data do not include government workers and would not be directly affected by the shutdown. This figure comes from a survey in which the Labor Department asks employers (both private sector and government) how many people were on the payroll for the pay period that includes January 12.

"The overwhelming conclusion from today's numbers is that the USA labor market remained incredibly strong at the start of 2019", said Leslie Preston, senior economist at TD Economics.

But the shutdown was also a driver of the rise in the unemployment rate, since the separate survey of households used to determine the joblessness counted furloughed workers as well as contractors as unemployed.

"Barring further tightening in financial conditions that would negatively impact economic activity, the very strong labor market picture supports our expectations that the Fed will keep a tightening bias this year".

Yet even employers whose revenue dropped likely held onto their workers during January.

The main reason for the temporary economic loss this quarter is that the thousands of government workers who missed two paychecks slowed their spending.

That data would not show up in the jobs report, but as the federal government tries to replace its aging workforce, "that's the kind of harm that will build up over years", Chamberlain said.

Share