Another Huge Month Of Job Growth Despite Government Shutdown

Staff Report

Total nonfarm payroll employment increased by 304,000 in January, and the unemployment rate edged up to 4.0 percent, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in several industries, including leisure and hospitality, construction, health care, and transportation and warehousing.

The change in total nonfarm payroll employment for November was revised up from +176,000 to +196,000, and the change for December was revised down from +312,000 to +222,000. With these revisions, employment gains in November and December combined were 70,000 less than previously reported. After revisions, job gains have averaged 241,000 per month over the last 3 months.

Household Survey Data

Both the unemployment rate, at 4.0 percent, and the number of unemployed persons, at 6.5 million, edged up in January. The impact of the partial federal government shutdown contributed to the uptick in these measures.

Among the unemployed, the number who reported being on temporary layoff increased by 175,000. This figure includes furloughed federal employees who were classified as unemployed on temporary layoff under the definitions used in the household survey.

Among the major worker groups, the unemployment rate for Hispanics increased to 4.9 percent in January.

The jobless rates for adult men (3.7 percent), adult women (3.6 percent), teenagers (12.9 percent), Whites (3.5 percent), Blacks (6.8 percent), and Asians (3.1 percent) showed little change over the month.

In January, the number of long-term unemployed (those jobless for 27 weeks or more) was little changed at 1.3 million and accounted for 19.3 percent of the unemployed.

The labor force participation rate, at 63.2 percent, and the employment-population ratio, at 60.7 percent, changed little over the month; both measures were up by 0.5 percentage point over the year.

The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) increased by about one-half million to 5.1 million in January. Nearly all of this increase occurred in the private sector and may reflect the impact of the partial federal government shutdown.

Persons employed part time for economic reasons would have preferred full-time employment but were working part time because their hours had been reduced or they were unable to find full-time jobs.

In January, 1.6 million persons were marginally attached to the labor force, essentially unchanged from a year earlier. (Data are not seasonally adjusted.)

These individuals were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months. They were not counted as  unemployed because they had not searched for work in the 4 weeks preceding the survey.

Among the marginally attached, there were 426,000 discouraged workers in January, little different than a year earlier. (Data is not seasonally adjusted.)

Discouraged workers are persons not currently looking for work because they believe no jobs are available for them. The remaining 1.2 million persons marginally attached to the labor force in January had not searched for work for reasons such as school attendance or family responsibilities.

Establishment Survey Data

Total nonfarm payroll employment increased by 304,000 in January, compared with an average monthly gain of 223,000 in 2018. In January, employment grew in several industries, including leisure and hospitality, construction, health care, and transportation and warehousing.

There were no discernible impacts of the partial federal government shutdown on the estimates of employment, hours, and earnings from the establishment survey.

In January, employment in leisure and hospitality rose by 74,000. Within the industry, job gains occurred in food services and drinking places (+37,000) and in amusements, gambling, and recreation (+32,000). Over the year, leisure and hospitality has added 410,000 jobs.

Construction employment rose by 52,000 in January. Job gains occurred among specialty trade contractors, with increases in both the nonresidential (+19,000) and residential (+15,000) components. Employment also rose in heavy and civil engineering construction (+10,000) and residential building (+9,000). Construction has added 338,000 jobs over the past 12 months.

Employment in health care increased by 42,000 in January. Within the industry, job gains occurred in ambulatory health care services (+22,000) and hospitals (+19,000). Health care has added 368,000 jobs over the past year.

Over the month, employment in transportation and warehousing rose by 27,000, following little change in December. In January, job gains occurred in warehousing and storage (+15,000) and among couriers and messengers (+7,000). Over the year, employment in transportation and warehousing has increased by 219,000.

In January, retail trade employment edged up by 21,000. Job gains occurred in sporting goods, hobby, book, and music stores (+17,000), while general merchandise stores lost jobs (-12,000). Employment in retail trade has shown little net change over the past 12 months (+26,000).

Mining employment increased by 7,000 in January. The industry has added 64,000 jobs over the year, almost entirely in support activities for mining.

Employment in professional and business services continued to trend up over the month (+30,000) and has increased by 546,000 in the past 12 months.

Employment in manufacturing continued to trend up in January (+13,000). Over-the month job gains occurred in durable goods (+20,000), while employment in nondurable goods changed little (-7,000). Manufacturing employment has increased by 261,000 over the year, with more than four-fifths of the gain in durable goods industries.

Employment in federal government was essentially unchanged in January (+1,000). Federal employees on furlough during the partial government shutdown were counted as employed in the establishment survey because they worked or received pay (or will receive pay) for the pay period that included the 12th of the month.

Employment showed little change over the month in other major industries, including wholesale trade, information, and financial activities.

The average workweek for all employees on private nonfarm payrolls was unchanged at 34.5 hours in January. In manufacturing, both the workweek and overtime decreased by 0.1 hour to 40.8 hours and 3.5 hours, respectively. The average workweek for production and nonsupervisory employees on private nonfarm payrolls held at 33.7 hours. (See tables B-2 and B-7.)

Earnings

In January, average hourly earnings for all employees on private nonfarm payrolls rose by 3 cents to $27.56, following a 10-cent gain in December. Over the year, average hourly earnings have increased by 85 cents, or 3.2 percent. Average hourly earnings of private-sector production and nonsupervisory employees increased by 3 cents to $23.12 in January. (See tables B-3 and B-8.)

The change in total nonfarm payroll employment for November was revised up from +176,000 to +196,000, and the change for December was revised down from +312,000 to +222,000. With these revisions, employment gains in November and December combined were 70,000 less than previously reported. After revisions, job gains have averaged 241,000 per month over the last 3 months.

Monthly revisions result from additional reports received from businesses and government agencies since the last published estimates and from the recalculation of seasonal factors. The annual benchmark process also contributed to the November and December revisions.

Partial Federal Government Shutdown  

Some federal government agencies were shut down or operating at reduced staffing levels during a lapse in appropriations from December 22, 2018, through January 25, 2019. The Bureau of Labor Statistics (BLS) was funded during the shutdown period and was operating as usual. Data collection for the household and establishment surveys occurred as scheduled.

In the household survey, individuals are classified as employed, unemployed, or not in the labor force based on their answers to a series of questions about their activities during the survey reference week.

Workers who indicated that they were not working during the entire survey reference week and expected to be recalled to their jobs should be classified as unemployed on temporary layoff.

In January 2019, there was an increase in the number of federal workers who were classified as unemployed on temporary layoff. However, there also was an increase in the number of federal workers who were classified as employed but absent from work.

BLS analysis of the underlying data indicates that this group included federal workers affected by the shutdown who also should have been classified as unemployed on temporary layoff.

Such a misclassification is an example of nonsampling error and can occur when respondents misunderstand questions or interviewers record answers incorrectly.

If the federal workers who were recorded as employed but absent from work had been classified as unemployed on temporary layoff, the overall unemployment rate would have been slightly higher than reported.

However, according to usual practice, the data from the household survey are accepted as recorded. To maintain data integrity, no ad hoc actions are taken to reassign survey responses.

In the establishment survey, businesses and government agencies report the number of people on payrolls during the pay period that includes the 12^th of the month. Individuals who work or receive pay for any part of the pay period are defined as employed.

Federal employees on furlough during the partial federal government shutdown were considered employed in the establishment survey because they worked or received pay (or will receive pay) for the pay period that included the 12th of the month.

Other workers (including federal contractors) who did not work or receive pay during the partial federal government shutdown were not counted among the employed.

Revisions to Establishment Survey Data

In accordance with annual practice, the establishment survey data released today have been benchmarked to reflect comprehensive counts of payroll jobs for March 2018.

These counts are derived principally from the Quarterly Census of Employment and Wages (QCEW), which counts jobs covered by the Unemployment Insurance (UI) tax system.

The benchmark process results in revisions to not seasonally adjusted data from April 2017 forward. Seasonally adjusted data from January 2014 forward are subject to revision. In addition, data for some series prior to 2014, both seasonally adjusted and unadjusted, incorporate other revisions.                          

The total nonfarm employment level for March 2018 was revised downward by 1,000 (-16,000 on a not seasonally adjusted basis, or less than -0.05 percent). The absolute average benchmark revision over the past 10 years is 0.2 percent.

The effect of these revisions on the underlying trend in nonfarm payroll employment was minor. For example, the over-the-year change in total nonfarm employment for 2018 was revised from +2,638,000 to +2,674,000 (seasonally adjusted).

All revised historical establishment survey data are available on the BLS website at www.bls.gov/ces/data.htm.

In addition, an article that discusses the benchmark and post-benchmark revisions and other technical issues is available at www.bls.gov/web/empsit/cesbmart.htm.

Additional information is available online at www.bls.gov/bls/shutdown_2019_empsit_qa.pdf.