The US economy added 225,000 jobs in January, as the surprisingly strong pace of hiring continues. Meanwhile, the unemployment rate edged slightly higher to 3.6%, as more people decided to look for jobs.
Job growth in the construction, health care, transportation and warehousing industries was particularly strong in January, according to the US Bureau of Labor Statistics’ report. Unseasonably mild weather in January helped the construction and transportation sectors, Capital Economics Chief US Economist Paul Ashworth wrote in a note.
Economists had expected only 160,000 new jobs in January. In 2019, monthly job growth averaged 175,000.
Manufacturing jobs declined for the second month in a row. The sector was in a downturn in the last five months of 2019, but factory activity grew in January.
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But the sector’s weakness isn’t yet a cause for concern for investors until transportation jobs follow a similar pattern, said JJ Kinahan, chief market strategist at TD Ameritrade. This suggests the manufacturing downturn is somewhat contained. A slump in transportation jobs would imply a more broad-based downturn in the production, trade and delivery of goods. The transportation sector added 28,000 new jobs in January.
The number of people working or looking to work grew by 574,000 people last month, after accounting for annual revisions to population estimates. This influx of workers sent the labor force participation rate up to 63.4%, its highest level since mid-2013.
“It’s great to see that people have hope and want to get back out there,” said Kinahan of the reentrance numbers, Kinahan called today’s report a “blow-out”.
Now, 61.2% of the US population 16 years and older has a job — the highest level for the employment-population ratio since late 2008.
“So the bottom line is that the unemployment rate only increased because of all the people coming into the labor force, although it’s worth cautioning that was probably a weather effect too,” Ashworth said.
The employment ratio of women aged 25 to 54 climbed to 74.7%, and is nearing the historic high of 74.9% it reached in 2000.
Average hourly earnings rose by 0.2% in January, and 3.1% over the past 12 months. With consumer price inflation at 2.3% on the year in December, employees still have a modest wage increase after accounting for inflation. This is important, as healthy consumers with disposable income are instrumental to the US economy.
The January report also included revisions for the 2019 data. The revisions showed the US economy added 2,096,000 jobs last year, down marginally from earlier reports that showed 2,108,000 jobs were added.
An upward revision to November and December numbers brought the average job gains over the past three months to 211,000 new positions.
Friday’s report was the first instance of same-sex married couples being counted in the general married people category.