WASHINGTON — U.S. employers
shrugged off last month's partial government shutdown and engaged in
a burst of hiring in January, adding 304,000 jobs, the most in
nearly a year.
The healthy gain the government reported Friday illustrated the job
market's durability nearly a decade into the economic expansion. The
U.S. has now added jobs for 100 straight months, the longest such
period on record.
The unemployment rate did rise in January to 4 percent from 3.9
percent, but mostly for a technical reason: Roughly 175,000 federal
workers were counted as temporarily unemployed last month because of
The government on Friday also sharply revised down its estimate of
job growth in December, to 222,000 from a previously estimated
312,000. Still, hiring has accelerated since last summer, a
development that has surprised economists because hiring typically
slows when unemployment is so low.
The ongoing demand for workers is leading some businesses to offer
higher pay to attract and keep staff. Average hourly wages rose 3.2
percent in January 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.
The strong job market is also encouraging more people who weren't
working to begin looking. The proportion of Americans who either
have a job or are seeking one — which had been unusually low since
the recession ended a decade ago — reached 63.2 percent in January,
the highest level in more than five years.
The 35-day government shutdown caused 800,000 workers to miss two
paychecks. But because these workers will eventually receive back
pay, they were counted as employed in the survey of businesses that
produces the monthly job gain.
But in a separate survey of households that's used to calculate the
unemployment rate, many of these people were counted as temporarily
jobless. That's a key reason why the unemployment rate rose despite
the healthy job gain.
Most economists have forecast that the shutdown will likely slow
economic growth for the first three months of this year. But some
say that even businesses that lost income from the shutdown likely
held onto their staffs, knowing that the shutdown would only be
Friday's solid jobs report provided a dose of reassurance that the
economy remains mostly healthy and likely to shake off any effects
of the shutdown. The nonpartisan Congressional Budget Office
estimates that the shutdown slowed annual growth for the
January-March quarter by about 0.4 percentage point, to a rate of
2.1 percent, though that loss should lead to a bounce-back later
The main reason for the temporary economic loss this quarter is that
the thousands of government workers who missed two paychecks slowed
their spending. The government itself also spent less. In addition,
many businesses across the country lost income. Tourists cut back on
visits to national parks, for example, thereby hurting nearby
restaurants and hotels.
Yet with unemployment so low and many companies struggling to fill
jobs, layoffs might not have been widespread.
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.
The reports that have been released have been mixed. The Federal
Reserve's industrial production report showed that manufacturing
output rose in December by the most in nearly a year, boosted by
But consumer confidence fell in January for a third straight month
as Americans' optimism dimmed amid the shutdown and sharp drops in
the stock market. Falling confidence can cause consumers to restrain
their spending, though economists note that confidence typically
returns quickly after shutdowns end.
The housing market has slumped as mortgage rates have increased.
Sales of existing homes plunged in December and fell 3.1 percent in
2018 from the previous year. Mortgage rates have fallen back after
nearly touching 5 percent last year, but the number of Americans who
signed contracts to buy homes still declined in December.
China's economy is decelerating sharply, the United Kingdom is
struggling to negotiate its exit from the European Union, and
Italy's economy has entered recession, exacerbating fears that
slower global growth will cut into U.S. exports.
Fed Chairman Jerome Powell this week cited the weaker global economy
as a key reason why the central bank will be "patient" before it
raises its benchmark interest rate again. That was a sharp
turnaround from January, when Fed policymakers forecast two
additional hikes for this year.