The US economy added 304,000 jobs in January, the 100th consecutive month of payroll gains, the US labour department said on Friday. The reading easily beat Wall Street expectations for 165,000 jobs. Job gains over the past three months have averaged 241,000.
The unemployment rate ticked up one-tenth of a percentage point to 4 per cent, partly because of the temporary effect of the 35-day federal government shutdown, which was triggered by a stand-off over President Donald Trump’s demand for a wall on the southern border. The showdown, which halted the wages of roughly 800,000 federal workers, ended on January 25 with Mr Trump agreeing to reopen the government for three weeks.
The number of Americans working part-time for economic reasons rose by about 500,000. That pushed up the so-called U-6 underemployment rate to 8.1 per cent from 7.6 per cent.
The labour force participation rate – which includes those looking for work as well as in a job – edged higher to 63.2 per cent, from 63.1 in December, as the strong labour market continued to pull in workers from the sidelines.
Average earnings increased 3.2 per cent year-on-year, down from an upwardly revised 3.3 per cent in December, but still around the quickest pace in a decade.
Hiring was spread across a wide range of industries, with manufacturers, retailers, leisure and hospitality, transport and warehousing and construction companies all adding jobs.
The new jobs numbers suggest the domestic US economy remains in strong health, despite Mr Trump’s trade war with China and increasing risks to global expansion.
The Federal Reserve kept the target range for its key rate unchanged at 2.25-2.5 per cent after Wednesday’s meeting, following an upward move in December, and pledged patience on future interest-rate hikes, citing muted inflation pressures and rising risks to global economic growth. The US central bank also signalled greater flexibility over unwinding its $4tn balance sheet, saying that it would adjust its policy of winding down its crisis-era stimulus programme if economic or financial conditions warrant it.
Last year the Fed began to slowly reduce its balance sheet by letting some of the bonds it held mature without reinvesting all the money back in the market. Investors have been complaining that the Fed’s plan for reducing its balance sheet has been contributing to volatile markets.
The Fed’s previous forecasting in December pointed to two further increases in short-term interest rates this year and the Fed chairman, Jerome Powell, suggested at the time that the reduction of the bank’s balance sheet was on automatic pilot. Friday’s jobs report is unlikely to lead the Fed to reverse course yet again.
