Roughy 353,000 jobs were added to the U.S. economy in January – exceeding expectations – while the unemployment rate remained flat at 3.7%, according to the U.S. Bureau of Labor Statistics.
Job gains were strongest in professional and business services, health care, retail trade, and social assistance. Employment declined in the mining, quarrying, and oil and gas extraction industry.
The number of unemployed people was little changed at 6.1 million. Of those, 1.3 million were long-term unemployed – also little changed. The long-term unemployed represented 20.8% of all unemployed people.
Both the labor force participation rate, at 62.5%, and the employment-population ratio, at 60.2%, were little changed compared with December.
Average hourly earnings for all employees on private nonfarm payrolls rose by 19 cents, or 0.6%, to $34.55. Over the past 12 months, average hourly earnings have increased by 4.5%. In January, average hourly earnings of private-sector production and nonsupervisory employees rose by 13 cents, or 0.4%, to $29.66.
“January’s unexpected jump in jobs is the second straight surprise to the upside following December’s gain of 216,000 jobs,” says Odeta Kushi, deputy chief economist for First American, in a statement. “However, this is not necessarily cause for alarm as far as the Federal Reserve is concerned. There is too little here for a trend, other labor indicators continue to cool and inflation is decelerating.”
“If inflation continues to decelerate, the Fed may well cut rates three times this year, which would still keep monetary policy in restrictive territory,” Kushi says. “If the Fed goes ahead with its planned cuts, mortgage rates are likely to remain near 6 percent, which should help the nascent housing market recovery.”
Kushi notes that residential building construction employment was up 0.3% year over year in January, while non-residential was up by 0.2%.
“Compared with pre-pandemic levels, residential building employment is up 12.3 percent, while non-residential building is up 6.3 percent,” she says. “The largest increase in monthly employment growth came from non-residential specialty trade contractors, whose primary activity is performing specific tasks – pouring concrete, site preparation, plumbing, painting, and electrical work-involved in building construction.”
Photo: Marten Bjork