US Job Creation Above Expectations In January
Initial readings of the number of new jobs created in the US economy last month have come in significantly above analysts’ projections. Pundits had expected job growth in the US economy to come in at a modest 165000, but in the event, the early indications are that it was closer to double this at 304000. The reason for the cautious language is that the initial reading of the December figure put job creation at 312000, but once firmer data became available, this had to be revised down to a more modest (but still good) 222000 – what’s 90000 jobs between friends?
January’s job growth was notable in the construction, health care, leisure and hospitality, transportation and warehousing sectors, according to the US Department of Labor’s analysis. January’s data marks the 100th straight month of net positive job data, plotting employment recovery after the worst of the Global Financial Crisis.
Again, perversely, US unemployment also edged higher, up from 3.9 to 4%. The Department of Labor attribute the rise to the partial shutdown of the Federal government which, they argue, also created a surge in part-time workers last month. The job creation figure remains well above the “break even” point of (roughly) 100000 new jobs which is required to balance new entrants into the workforce each month. The average monthly job creation figure for 2018 came in at a healthy 223000.
There is some evidence that demand for workers is putting positive pressure on wages: hourly pay in the private sector hit $27.56 in January, up by 3.2% year-on-year whilst US inflation is currently running at 1.9% (December 2018 data). Wage inflation in January eased marginally over the December figure which came in at 3.3%.
The Federal Reserve signalled its intention to soft pedal on rate rises for the time being when it met last month. The rate of wage inflation will be a key figure that the Fed will be watching for the timing of its next hike.