U.S. employers hired the most workers in 11 months in January, indicating the labor market remains strong despite fears of an economic slowdown.
The Labor Department said Friday the economy added 304,000 jobs last month, reaching the milestone of 100 straight months of employment gains. The unemployment rate rose from 3.9% to 4% due to federal employees who were furloughed by the government shutdown being counted as unemployed.
Private economists had expected an increase of about 170,000 jobs and the unemployment rate to be unchanged.
“Some of the unexpectedly large jump in hiring appeared to have been pulled forward from December, which was revised down from 312,000 jobs to 222,000,” CNN reported. “Still, the average for the last three months is now 241,000 jobs — which represents an acceleration in job growth, not a slowdown, as many have been predicting.”
Average hourly earnings rose 0.1% from January, which is slower than the past few months, but still 3.2% over the year — well above inflation.
The Federal Reserve cited economic “cross-currents” and diminished inflation risks this week in announcing it would take a “patient” approach to interest-rate policy after four rate hikes in 2018.
“The Fed chickened out on further rate hikes this year and boy are they ever misreading the tea leaves on where the economy is going next,” Chris Rupkey, chief economist at MUFG in New York, told Reuters. “U.S. companies have not let up one bit on their hiring in response to risks out there in the world economy.”
But the U.S. economy is still facing the reduced impact of tax cuts and weakening growth in China and Europe. “It’s highly likely that an economic slowdown will occur in 2019,” said Sung Won Sohn, chief economist at SS Economics in Los Angeles. “The question is by how much.”
Job gains in January were led by the leisure and hospitality sector, which has added 410,000 jobs over the past year. Retail employment, which has been essentially flat over the past year, rebounded by 20,800 jobs, while professional and business services employment increased by 30,000 jobs last month.