E The American Economy Still Has Considerable Momentum

The five-week US government shutdown may have hurt the economy, but there are no signs that the estimated $11 billion hit slowed the job market.

In January nonfarm payrolls increased by 304,000 following a 222,000 jobs growth in the previous month and a 196,000 gain in November.

The January labor market figures were somewhat distorted by the partial government shutdown, but the strong payroll employment gain together with the increase in the labor force participation suggests continuing momentum in the job market.

Even as employment in January topped most forecasts, money wage gains cooled a bit and the government shutdown helped increase the unemployment rate.

The January unemployment rate was 4% versus 3.9% in December, while persons unemployed for 27 weeks or more accounted for 19.3% of the unemployed versus 20.5% in December. The U6 unemployment rate, which accounts for unemployed and underemployed workers, was 8.1% in January versus 7.6% in December.

In January average hourly earnings increased 0.1% after increasing 0.4% in December. Over the last 12 months, average hourly earnings rose 3.2% in January compared to 3.3% for the 12 months ending in December.

The labor force participation rate rose to 63.2% in January, the highest participation rate since 2013. In this very tight labor market, an increase in the participation rate represents a sign of labor market confidence.

While the recent US job market figures are positive for the economy, the monthly employment surge is unlikely to alter the Fed’s decision to hold interest rates steady for a while. 

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