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US employment growth defied expectations in January

China Daily Global | Updated: 2019-02-05 00:36

Employment in most sectors surged in January as US employers hired 304,000 new workers, the 100th month of expansion in the job market. Wall Street analysts had expected the economy to add about 172,000 jobs last month.

"Underlying job growth appears quite solid," Goldman Sachs said in a research note.

The key question: Does the strong jobs report and the Federal Reserve's decision to hold interest rates steady for the immediate future mean the US economy won't falter if global economic growth continues to lag? The short answer is probably not, but there appears to be no immediate trouble ahead for the US economy.

A strong economy is good news for US President Donald Trump's re-election prospects in 2020, especially as announced candidates seeking the Democratic Party's nomination have backed new federal programs that would require massive tax hikes and take money away from investment in the private sector.

The stock market rose last week on January's strong jobs report. Stocks posted the strongest January returns in 30 years. Trump tweeted, "We have, by far, the strongest economy in the world!"

Wage gains have been slow but steady and haven't created pressure on corporate profits. In the last 12 months, the average US wage has increased by 85 cents, or 3.2 percent, to $23.12 an hour in January. Inflation remains low. Consumer spending, about two-thirds of the US economy, remains strong.

Last week, the US Federal Reserve said it would hold interest rates steady, assuring businesses seeking to expand that the cost of new loans will not rise sharply. The bond market shrugged at Friday's jobs report, perhaps reflecting concerns about a global economic slowdown and the outcome of US-China trade talks.

Negotiators appear to be making progress. Reuters reported on Feb 1 that state-owned companies in China bought at least 1 million tons of US soybeans for shipment between April and July. The deals came a day after China's negotiators said the country would buy 5 million tons of soybeans.

The US unemployment rate edged up to 4 percent, but it's an anomaly created by the way jobs are tallied and not related to the 35-day partial shutdown of the government. The temporary furlough of about 175,000 federal workers skewed the data.

"There were no discernible impacts of the partial federal government shutdown on the estimates of employment, hours, and earnings," the US Bureau of Labor Statistics (BLS) said in its report.

The BLS said payrolls increased in a range of industries including, leisure, hospitality, construction, manufacturing, mining, healthcare, transportation, warehousing and professional services.

The BLS, which stayed open during the partial shutdown, conducts two monthly surveys to determine the current state of the US labor market. The payroll survey measures nonfarm employment, hours and earnings in the non-farm sector.

Data for the survey are drawn from a representative sample of about 142,000 US businesses.

The highlights: Construction jobs rose by 52,000 in January, including 19,000 in non-residential, 15,000 in residential. Construction has added 338,000 jobs in the last 12 months. The current state of the construction industry reflects a strong economy and suggests builders believe demand will remain strong.

Healthcare employment increased 42,000 in January, including 22,000 in ambulatory healthcare services and 19,000 in hospitals. This may reflect an aging population.

Manufacturing posted a net gain of 13,000 jobs in January, continuing its overall upward trend. Jobs in the durable goods sector, defined as products intended to last three years or more, added 20,000 jobs, but employment in nondurable goods fell by 7,000 jobs.

Manufacturing jobs grew by 261,000 in a year, with more than 90 percent of the gain in durable goods.

Retail trade added 21,000 jobs in January, including specialized stores such as hobby, book and music stores. But employment in general merchandise stores fell by 12,000 in January. Overall, retail employment showed little net change in the past 12 months.

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