US economy adds 304,000 jobs in January, smashing expectations as the unemployment rate rises

David McNew/GettyCity Hall is seen in the distance as construction workers help carry a huge American flag in a march to the Metropolitan Detention Center during one a several May Day immigration-themed events on May 1, 2014 in Los Angeles, California
  • The economy added 304,000 jobs in January, significantly more than economists had expected.
  • Average hourly earnings rose 3.2% from a year earlier.
  • The partial government shutdown could have affected numbers, however.

Offering the latest snapshot of the economy, the official employment report out Friday showed the US added significantly more jobs than expected in January and that wages increased despite the longest partial government shutdown in history.

The economy added 304,000 nonfarm payrolls at the start of 2019, bringing the labour market into a 100th straight month of job creation and compared with forecasts for increase of 165,000.

The unemployment rate rose 0.1 percentage points to 4%, its highest level since June, while average hourly earnings increased by 3.2% from a year earlier. The labour force participation rate jumped to 63.2%, its highest level since 2013.

The partial government shutdown that ended last Friday, which was the longest on record, may have had a slight impact on the report. The five-week disruption left 800,000 federal employees furloughed or forced to work without pay and was expected to cost the economy $US11 billion, about a third of which may never be recovered.

That probably didn’t directly affect the headline number of hiring figures. But it could show up in the unemployment rate, which is based on a survey of households rather than employers. Indirect effects, such as contractors and private sector employees who lost work due to the shutdown, could be less clear.

Even though the shutdown was not expected to interrupt the average 200,000 jobs per month that have been added over the last decade, some in the White House had been bracing for weaker-than-expected results. Recent polls suggest a majority of Americans blamed the president for a fourth of the government temporarily closing.

“So, what we’ll say if we were to see that negative number is, ‘Well, sure it was negative this, but if you adjust for the furlough, it looks like another plus-200 month,'” Council of Economic Advisers chairman Kevin Hassett told reporters last month.

December’s blockbuster employment report was revised downward to 222,000 jobs from 312,000. Following revisions, job gains have averaged 241,000 per month since November.

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