U.S. payrolls added 304,000 workers in January, letting President Trump keep bragging rights for a strong labor market as employers seemingly shrugged off the longest government shutdown in the country’s history.
The increase reported by the U.S. Labor Department on Friday was nearly double the average estimate of 165,000 from economists surveyed by FactSet and remained well above the level needed to keep up with inflation. The unemployment rate, calculated separately, ticked up to 4 percent from 3.9 percent in December and compares with a nearly 50-year low of 3.7 percent in November.
“A lot of economists were pricing in some impact of the government shutdown in the job growth numbers, and clearly that didn’t play out, particularly in the private sector,” Joseph Song, an economist with Bank of America, told the Washington Examiner.
January hiring almost matched an initial report from the previous month that employers added a jaw-dropping 312,000 workers, and reflects the impact of a partial government closure that began Dec. 22 after President Trump refused to sign any government-funding bill that didn’t include $5.7 billion for a wall along the southern U.S. border that he promised in his 2016 campaign.
The president and House Democrats, who had refused to pay for a wall they derided as inefficient and racist, struck a deal on Jan. 25 to reopen closed agencies while negotiating for three weeks on border security.
“While the Democrats obstruct commonsense solutions to secure our border, hardworking Americans know that Donald Trump continues to fight for their prosperity and safety every single day,” Lara Trump, the wife of the president’s son Eric, and a senior adviser to his re-election campaign, said in a statement. “Our booming economy has hit pay dirt and continues to defy the odds.”
Some of the biggest employment gains were in construction, which added 52,000 workers, and the retail and healthcare industries. Even the federal government added 1,000 workers, with most agencies funded before the shutdown began and operating normally.
Notably, the 800,000 federal employees who went without pay for more than a month, some of whom were required to keep working anyway, weren’t counted as unemployed since Congress authorized a bill covering their salaries once the shutdown ended.
Overall, the labor market is “much more solid than anybody would have thought at this stage of the expansion,” Mark Hamrick, senior economic analyst for Bankrate.com, told the Washington Examiner. If payroll growth in January topped expectations, however, the estimate for the previous month’s growth “was revised back to earth,” he said; December gains were pared by more than 28 percent to 222,000.
Economists including Morgan Stanley’s Ellen Zentner had warned the latest report might be affected by government contract workers who were sidelined and unlikely to receive back pay like their colleagues on federal payrolls.
“We estimate that this will translate to about 30,000 fewer net job gains than we would have seen otherwise in categories like business services and manufacturing,” Zentner wrote in a report earlier this week. “There may also be an indirect hit to jobs for those providing services to government employees, such as restaurant workers.”
