U.S. employers created more new jobs than expected in January, marking a strong start to the new year and decade and signaling the U.S. economic expansion, now at 11 years, remains intact.
Nonfarm payrolls rose to 225,000 last month, up from a revised 147,000 new positions in December and above analysts' forecasts of 161,500, the Labor Department reported on Friday. The unemployment rate ticked up from a 50-year low to 3.6%. Wages gained 3.1% year on year, a slight rise above December’s 3% pace.
Over the past three months, the U.S. economy added an average 211,000 jobs. Job growth was revised higher in the last four months of 2019. The share of Americans working or looking for work rose in January to 63.4% from 63.2% in December.
“January’s better-than-expected jobs report is well-timed in that it boosts economic confidence just when coronavirus fears had investors questioning the growth outlook," said Alec Young, managing director of global markets research with FTSE Russell.
A warmer-than-usual January helped bolster the numbers, particularly in the construction industry, which led the way in job creation, adding 44,000 positions, well above its 2019 average of 12,000.
Manufacturing, meantime, posted a 12,000 drop in positions thanks to declines in motor vehicle- and parts-related jobs.
Leisure and hospitality added 36,000 new positions, as did health care. Professional and business services grew by 21,000, bringing to 390,000 the number of jobs the sector has added. Transportation and warehousing increased by 28,000.
All of that spurred an increase in the labor force participation rate, which gained 0.2 percentage points to 63.4%, matching its highest level since June 2013.
"As robust as the jobs number was, there is nothing more beautiful than a continually growing labor force participation rate," said David Bahnsen, chief investment officer of Newport Beach, Calif.-based The Bahnsen Group, which oversees $2.25 billion in assets under management.
"That is the metric that has been on a secular decline and that is the number reflecting growth and improvement."
Annual revisions released Friday showed the overall employment level for March 2019 was revised down by 514,000 jobs to 150.28 million. For all of 2019, employers added 2.096 million jobs, a downward revision of 12,000.
January's tally included some new tweaks, in particular the inclusion of same-sex couples in the total employment number for married workers.
The unemployment rate for married men ticked higher to 1.7% from 1.6%, while the rate for married women was unchanged at 2.1%, the Bureau of Labor Statistics said.
To be sure, stock market and Federal Reserve-watchers were already tamping their expectations of another Fed rate cut, which some investors had been betting on amid the growing impact of the coronavirus health crisis on global growth.
Said Young of FTSE Russell: "Stocks are overbought after a huge rally, some of which has been predicated on hopes for a June Fed rate cut which now seems highly unlikely, As such, equities may not react positively in the near term despite the strong read on the labor market.”