January Brought Big Payroll Gains, Government Shutdown or Not

The jobs market continues to be strong. Government shutdown or not, this looked like a big report from the Bureau of Labor Statistics for January’s employment situation. The BLS reported that nonfarm payrolls rose by 304,000 and private sector payrolls rose by 296,000 in the month of January. Job gains were seen mostly in leisure and hospitality, construction, health care and transportation.

While the Dow Jones estimate was for only 170,000 new jobs in January’s nonfarm payrolls, there was a net downward revision of 70,000 payrolls when looking at the combined revisions for December and November. Also worth noting was that the more than 300,000 federal workers who were furloughed had an impact on the reporting. Another issue to consider was that the ADP payrolls report had sort of tipped the hat to predict big jobs gains in January.

The unemployment rate rose to 4.0% in January, but the BLS pointed out that rise from 3.9% was due to the government shutdown. The number of unemployed people also ticked up to 6.5 million, again with the BLS indicating that the shutdown was responsible.

Among the unemployed, the number who reported being on temporary layoff increased by 175,000, and that figure was shown to have included furloughed federal employees who were classified as unemployed on temporary layoff under the definitions used in the household survey.

Average hourly earnings for all private-sector workers rose by three cents to $27.56 per hour in January, after a 10-cent gain in December. Private sector payroll gains by group were shown as follows:

  • Employment in leisure and hospitality rose by 74,000.
  • Construction employment rose by 52,000.
  • Health care increased by 42,000.
  • Transportation and warehousing rose by 27,000.
  • Retail trade rose by 21,000.
  • Mining employment increased by 7,000.
  • Professional and business services rose by 30,000.
  • And manufacturing rose by 13,000.

The number of long-term unemployed people in January, counted as those who have been jobless for 27 weeks or more, was little changed at 1.3 million. This group accounted for 19.3% of all unemployed people.

The labor force participation rate was 63.2%, and the employment-population ratio came in at 60.7%. Both readings were little changed over the month but were up 0.5 points from a year earlier.

The BLS also showed that the number of people employed part-time for economic reasons, the involuntary part-time workers, rose by roughly one-half million to 5.1 million in January. The BLS also indicated that nearly all of this increase was in the private sector and may reflect the impact of the partial federal government shutdown.

One issue to consider, aside from the government shutdown, is that sometimes attention has to be paid to the special notes and changes made to the pooling of information. The January report said:

Establishment survey data have been revised as a result of the annual benchmarking process and the updating of seasonal adjustment factors. Also, household survey data for January 2019 reflect updated population estimates.