You are here


Mild weather boosts job growth in January

Non-farm payrolls increase by 225,000 jobs, with employment at construction sites going up by the most in a year


US job growth accelerated in January, with unseasonably mild temperatures boosting hiring in weather-sensitive sectors, indicating the economy will probably continue to grow moderately despite a deepening slump in business investment.

The Labor Department's closely watched monthly employment report on Friday showed nonfarm payrolls increased by 225,000 jobs last month, with employment at construction sites going up by the most in a year amid milder-than-normal temperatures. There were also strong gains in hiring in the transportation and warehousing industry.

Economists polled by Reuters had forecast payrolls would rise by 160,000 jobs in January. Data for November and December was revised to show 7,000 more jobs created than previously reported.

But employment gains are expected to slow in February as the coronavirus disrupts supply chains.

The report also showed the economy created 514,000 fewer jobs between April 2018 and March 2019 than originally estimated. The biggest downgrade to payrolls over a 12-month period since 2009 suggests job growth could significantly slow down this year. This annual benchmark revisions to payrolls will attract attention amid concerns the Labor Department's Bureau of Labor Statistics, which compiles the employment data, may not be fully capturing the impact on payrolls of President Donald Trump's 19-month trade war with China, which has contributed to the longest downturn in business investment since 2009.

The downward revision in the level of employment suggests the government's birth-death model, which it uses to calculate the net number of jobs from new business and closings, is faulty. Economists say payrolls have tended to be overstated when the trend in growth is weakening. They say the downward revisions could impact financial markets' assessments of the labour market.

The slowdown in job growth is blamed on worker shortages and ebbing demand for labour. Even though employment growth has slowed, the pace remains well above the 100,000 jobs per month needed to keep up with growth in the working-age population. The government, however, provided adjusted data, which showed the unemployment rate rising one-tenth of a percentage point to 3.6 per cent in January. The labour force participation rate rose two-tenths of a percentage point to 63.4 per cent last month, the highest since June 2013.

The tightening labour market is steadily driving up wages. Average hourly earnings increased seven cents, or 0.2 per cent, last month after gaining 0.1 per cent in December. That lifted the annual increase in wages to 3.1 per cent in January from 3.0 per cent in December.

Federal Reserve chair Jerome Powell said last month the United States' low labour force participation, relative to those of other advanced economies, "represents more labour supply, and it may be holding down wages". Still, wage growth is probably enough to support a decent pace of consumer spending and keep the economy chugging along. REUTERS