Did the Government Shutdown Impact the January Jobs Report?

Feb 04, 2019
| Michael Altiero
January 2019 Jobs Report

The last month has seen a great deal of uncertainty due to the 35-day government shutdown, the longest to ever occur in the United States. Many workers and employers were impacted by this event (especially federal employees), as was the U.S. economy.

Coming off an exceptionally strong December Jobs Report, many industry professionals expected the shutdown to also negatively impact the jobs market.

On February 1, the Department of Labor released the results of the first jobs report of 2019, and the January results were surprising.
 

Payroll Estimates Once Again Surpass Estimates

Just like in December, job growth exceeded estimates in January. Economists had predicted payrolls to increase by around 170,00 jobs. Instead, the Jobs Report revealed that the economy added 304,000 jobs, making this the 100th consecutive month of payroll gains in the United States.

Besides the shutdown, the current trade war with China and the slowing global economy were expected to negatively impact the jobs market.

One negative though is that December gains were revised down significantly. While the December report indicated 312,000 jobs were created, the Department of Labor now say that number is 222,000. This represents the largest monthly revision since 2010.

However, even with this change, the December number still beat expectations that were set.
 

Unemployment Rate Rises Again

December saw unemployment rate increase from a 50-year low of 3.7% to 3.9%. What happened to this important statistic in January?

The latest report has unemployment at 4.0%, making it two straight months of increases. This is one area where the government shutdown’s effects were felt as about 175,000 workers said they were temporarily laid off.

Now that the shutdown has ended (at least temporarily), it will be interesting to see if unemployment rebounds in February as these workers re-enter the workforce.
 

Wage Growth Dips

In December, wage growth saw an annual gain of 3.3%, which was a new 9 year high. Coming off this impressive result, economists and analysts were anxiously awaiting January’s data.

But the results didn’t match the anticipation, as year-over-year growth decreased slightly to 3.2%. Despite this decline, it is still a healthy number to most experts.

Many analysts are expecting wage growth to reach 3.5% by later this year, with possibilities of this number being even higher. We will have to continue monitoring wage growth data in the coming months to see if this expectation is ultimately reached.
 

The United States Job Markets Start 2019 Off Strong

Once again, the monthly jobs report showed that the United States job market continues to be strong as recruiting and retention grow more challenging for employers.

And while there are some causes for concern, the fact that the government shutdown didn’t have a larger impact shows just how healthy aspects of the United States economy continue to be.

We’ll have to wait for the February Jobs Report to see if the jobs market continues its impressive run.

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