Employment Situation: Another Solid Report Despite Negative Revisions

February 1, 2019
Bottom Line: Overall, looking through volatility and revisions, this was another solid report. The trend job growth rate is accelerating just slightly amid continued strength in labor markets while wage growth hovers near cycle highs but sill below levels seen in prior cycles. Payrolls rose sharply more than expected in January, up 304k, but revisions subtracted 70k jobs from the final two months of 2018. Goods producing industries started the year on a particularly strong note. The three-month average for job gains is now 241k, near the pace of the last six months and above the 223k pace of 2018, suggesting trend growth remains strong and is even accelerating just slightly. The unemployment rate rose, as household employment dropped more than the decline in labor force. Over the past year, the unemployment rate has declined by 0.1 percentage points, the result of 2,212k more people finding jobs as 2,106k more people entered the labor force. Hourly earnings rose modestly less than expected after a solid increase in December. Payroll Employment rose by 304k in January, compared with market expectations for an increase of 165k. The prior 2 months were revised, lower in December by 90k and higher in November by 20k. Government jobs ROSE by 8k. Consequently, private sector jobs ROSE by 296k. Private education jobs rose by 9k. State and Local education jobs fell by -3k. Overall employment is now 1.9% ABOVE its year ago level, Over the past 12 months, 2,807k jobs have been created. In January, the job gains were in Trade, Transportation & Utilities (+31k with 21k of those in Retail Trade), Professional & Business Services (+30k with the addition of 1.0k in Temp Help Services), Leisure & Hospitality (+74k), Construction (+52k), Education & Health Services (+45k), Manufacturing (+13k), Manufacturing (+13k), and Government (+8k). Jobs were shed in Information (-4k). The Unemployment Rate ROSE by 0.1 percentage points in January to 4.0%, compared with market expectations for a no change to 3.9%. Household employment fell by 251k while the labor force declined by 11k, resulting in an increase in the number of unemployed of 241k. The Labor Force Participation Rate ROSE by 0.1 percentage points to 63.2%. The Employment-Population Ratio ROSE by 0.1 percentage points to 63.2%. The number of people Working Part-Time for Economic Reasons ROSE by 499k to 5,079k. while Long-Term Unemployment FELL by 54k to 1,252k (accounting for 19.2% of the unemployed), while the Mean Duration of Unemployment FELL by 1.3 weeks to 20.5 weeks. There are now 6.5 million people officially unemployed. In addition, there are another 5,254k people who say they want a job but are not currently looking for one. Finally, another 5,079k people are working part-time because of slack economic conditions. The Index of Aggregate Hours ROSE by 0.3%, combining the solid gain in private payroll employment and the steady workweek. Hourly Earnings ROSE by 0.1% in January, below market expectations of 0.3%. Hourly earnings are now 3.2% ABOVE their year ago level. Weekly Earnings also ROSE by 0.1%, the result of the change in hourly earnings and a steady workweek. Weekly earnings are now 3.5% ABOVE their year ago level. The Average Workweek was UNCHANGED by 0.0 to 34.5 hours, in line the market consensus at 34.5 hours.