Economy Adds 300,000 Jobs in January Despite Shutdown, Defying Expectations

The US economy added 304,000 jobs in January a surprisingly strong month

Jim Baird, chief investment officer at Plante Moran Financial Advisors, wrote that though there is volatility in the U.S. stock market, the encouraging jobs numbers will ultimately strengthen the USA economy. The Labor Department calculates the unemployment rate by using a different survey - known as the household survey - where they literally knock on the doors of some people's homes and ask how many adults are employed and how many are unemployed.

That data would not show up in the jobs report, but as the federal government tries to replace its aging workforce, "that's the kind of harm that will build up over years", Chamberlain said. The U.S. Labor Department reports that non-farm payrolls surged by 304,000 last month.

In January, retail trade employment edged up by 21,000.

Some of the best forecasters in the country had predicted job gains of about 170,000, a substantially lower figure. Hiring was likely boosted by mild temperatures in January.

The rate of unemployment rose up to four percent - from the 3.9 percent that was recorded last December - as did the number of people that are unemployed, increasing to 6.5m. The unemployment rate rose to 4 percent, its highest level since June, which the Labor Department attributed to the impact of the shutdown.

Teresa Carroll, an executive at the staffing firm Kelly Services, said her company has explained to many clients that they have to pay more to find the workers they need.

But the shutdown was also a driver of the rise in the unemployment rate, since the separate survey of households used to determine the joblessness counted furloughed workers as well as contractors as unemployed.

"They've enjoyed two decades of minimal pay growth in general", she said.

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The Federal Reserve, which keeps a close eye on the employment numbers, said Wednesday that the labor market has continued to strengthen since December.

But the rate of job growth in the industry is also bringing up labor costs as companies increase wages to lure workers that are increasingly hard to find.

The Fed on Wednesday kept interest rates steady but said it would be patient in raising borrowing costs further this year. That compared to an 85-cent increase at 3.2 percent over the year.

Accordingly, one would expect that the headline establishment survey jobs number will not capture the employment disruption caused by the shutdown, but instead will reflect the prevailing labor market forces for the month of January.

Here's a brief rundown on how the shutdown did and did not affect the January unemployment report.

And for most of January, the weather was relatively warm in much of the United States, which likely boosted construction employment. Over the year, leisure and hospitality has added 410,000 jobs. The latest figures helped The Dow Jones have a good start in early morning trading.

Jessica Jacumin began a permanent job a month ago as a cook at an assisted living facility in Augusta, Georgia, after working there as a paid intern.

Health care increased by 42,000. That, in turn, has allowed their family to spend a bit more freely.

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