January US Jobs Report Was Far More Impressive Than It Should Have Been

If the government shutdown was supposed to stifle the economy, somebody forgot to tell employers that. They hired, on a net basis, 304,000 employees last month… the strongest growth since February 2018. Higher wages suggest employers had to fight to attract those workers too.

And yet, although the 800,000 furloughed government workers were technically counted as employed for the purpose of the Department of Labor’s number-crunching, it can’t be ignored that the number of people with jobs fell, while the number of people officially unemployed expanded. Those would almost be red flags were it not for the fact the labor force participation rate surged to a multi-year high, as did the portion of the population with jobs.

The data, for February anyway, merits a line-by-line examination.

Payroll Growth vs. Unemployment Rate

The U.S. added 304,000 payrolls last month, exceeding expectations, and making it an above-average month. The economy has seen net job growth for 100 consecutive months now. Yet, the unemployment rate ticked higher, from 3.9% to 4.0%. Although the government shutdown theoretically wasn’t supposed to impact employment calculations, undoubtedly the ripple effect from the closure adversely impacted some employees that indirectly serve the government, or directly serve those who have been furloughed.

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Yes, it’s a mixed message that doesn't become any less mixed when looking at the raw numbers.

Employed, Unemployed and Sidelined

Last month, the total number of workers with jobs fell from a record of 156.9 million to 156.7 million, while the number of workers officially unemployed (receiving benefits) grew from 6.3 million to 6.5 million. The two numbers jibe with one another, and the latter jibes with the unemployment rate calculation; the official unemployment rate is calculated by dividing the number of unemployed individuals by the size of the workforce.

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