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January Jobs Report: Another Surge

Good news abounds inside latest employment data …

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The United States economy gained a whopping 304,000 jobs during the month of January – erasing concerns over the potential impact of the recently concluded partial government shutdown.  Meanwhile workers reentered the labor force in droves, driving work force participation to levels not seen in nearly five years.

“There were no discernible impacts of the partial federal government shutdown on the estimates of employment, hours, and earnings,” number-crunchers at the U.S. Bureau of Labor Statistics (BLS) noted.

Also, the economy has now added jobs for 100 consecutive months – a new record.

The buoyant print dramatically exceeded expectations of 165,000 new jobs, however a chunk of January’s gains appear to have come from a sharp, downward revision to December’s “blowout” print of 312,000 new jobs.  That number was reduced by 90,000 to 222,000, while November’s job gains were revised upward by 20,000 – from 176,000 to 196,000.

Still, sustained employment expansion continued into the new year despite economic jitters – and despite ongoing efforts by the Federal Reserve to cool growth.  All told, job gains are now averaging 241,000 per month over the last three months – the sort of steady employment expansion that is necessary to keep pace with the nation’s growing population.

Particularly encouraging?  Labor participation.  According to the latest data, this key employment metric climbed by 0.1 percent to 63.2 percent – the highest it has been since September of 2013.

Want more good news?  For the second consecutive month, average hourly earnings expanding by 3.2 percent – although monthly earnings climbed by only 0.1 percent, the slowest rate of growth since October 2017.

Here is the full report …

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(Via: BLS)

Our view?  Obviously this report is chock full of good news … especially the expanded labor participation numbers.  Not only are more people finding work, more people are seeking it – which is a commentary on the expanded availability of better positions.

Still, there are storm clouds on the horizon – most of them driven by the Fed’s inexplicable decision to continue hiking interest rates even though inflation is chugging along right at its target range of two percent.

U.S. president Donald Trump and his chief of staff, Mick Mulvaney, have been consistent critics of the Fed’s rate hikes … as they should be.  The secretive central bank has raised interest rates seven times in the two years since Trump took office after raising them only twice during Barack Obama’s entire eight years as president.  Also, the second Obama-era rate hike took place on December 14, 2016 – more than a month after Trump was elected.

For an entity that claims to be non-political, that strikes us as exceedingly calculated … not to mention inconsistent with its stated inflationary objectives.

Anyway … this news site has maintained for some time that the American economy is on a razor’s edge heading into 2019, and the Fed is projecting overall economic expansion will slow to 2.3 percent this year, 2 percent in 2020 and 1.8 percent in 2021.

The U.S. Bureau of Economic Analysis (BEA) was supposed to issue an initial gross domestic product print for the fourth quarter of 2018 this week, however the partial shutdown has delayed that release.  According to the Atlanta Federal Reserve’s latest GDP Now forecast, growth is expected to clock in at around 2.7 percent.

That would mean the American economy expanded at better than a 3 percent clip for the first time since 2005.

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