US economy tops jobs estimates in January despite shutdown

Non-farm payrolls up by 304,000 in first month

The large jobs jump came at the expense of a sizeable revision to December’s number.  Photograph: iStock

The large jobs jump came at the expense of a sizeable revision to December’s number. Photograph: iStock

 

The US labour market started 2019 in robust shape, with the economy adding more jobs than expected in January in the face of the recent government shutdown, and despite a slight increase in the unemployment rate.

Non-farm payrolls increased by 304,000 in the first month of the year, the US Labour department said on Friday, smashing Wall Street expectations for 165,000 jobs.

However, the large jump came at the expense of a sizeable revision to December’s number, which was revised lower by 90,000 to 222,000.

The unemployment rate ticked up one-tenth of a percentage point to 4 per cent, versus forecasts it would hold at 3.9 per cent.

Average earnings increased 3.2 per cent year-on-year in January, down from an upwardly revised 3.3 per cent (previously 3.2 per cent) in December, but still around the quickest pace in a decade.

The jobs data come at a critical juncture for policymakers, with Federal Reserve officials pledging at their rate-setting meeting on Wednesday to take a patient approach to potential future rate rises, depending on the strength of incoming economic data. Markets were roiled last year over concerns the Fed was raising rates too quickly, possibly jeopardising domestic growth.

Stock futures trimmed earlier declines, with those for the S&P 500 trading 0.1 per cent higher, having been down as much as 0.3 per cent earlier on Friday. Trading in Treasuries and the dollar was choppier, though, with the former falling before staging a comeback.

Yield

The yield on the benchmark 10-year US Treasury was 0.5 basis points higher at 2.6395 per cent, but had jumped to a session high of 2.6471 per cent immediately following the data. The dollar was initially buoyed by the numbers, with the DXY index fighting back to be even for the day, but has since lost ground and was 0.1 per cent weaker at 95.522.

“A tight labour market and healthy wage growth support economic growth, and today’s data should buoy consumer spending and could boost the stock market,” said Kully Samra, vice-president at Charles Schwab. “However, a string of positive data could lead the Federal Reserve to ‘un-pause’ its rate hike cycle sooner than expected, which would likely result in volatility and pull backs.” – Copyright The Financial Times Limited 2019