Unusually warm January helps add 225k jobs to the economy

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A robust 225,000 jobs were added to the economy in January and the month’s unusually mild weather likely played a role in strengthening the pace of hiring, thanks to a boost from construction companies.

The construction industry alone added 44,000 jobs to the market, due to better weather allowing for more construction projects to proceed.

Wages also increased during the month, with the average hourly earnings rising by seven cents, or 0.2 percent, lifting the annual increase in wages to 3.1 percent in January from 3 percent in December.

President Trump celebrated the news on Friday, tweeting: ‘JOBS, JOBS, JOBS! #PromisesMadePromisesKept’. 

And with last month’s job growth beating expectations, officials were quick to wave off concern about economic fallout over the spread of coronavirus, which has now claimed more than 600 lives. 

Larry Kudlow, the Director of the United States National Economic Council, said on Friday that President Trump discussed the outbreak with President Xi, saying: ‘Both leaders felt that China’s a strong resilient country that will be able to handle this.’

Kudlow added: ‘Both leaders were kind of upbeat on this.’

Addressing the increase of job numbers, Kudlow said: ‘The Fed has done a good job at changing directions and they’ve wiped out some of the unnecessary rate hikes that I think slowed the economy.’

He added he wouldn’t mind seeing interest rates cut, saying: ‘I wouldn’t mind seeing a bold Fed and if they cut the funds rate, I wouldn’t mind seeing it.’

The government’s monthly jobs report signaled businesses remain confident enough to keep hiring, with the pace of job growth accelerating from a year ago. 

In turn, the public’s confidence that jobs are plentiful is persuading more people without jobs to begin looking for one.

Last month, 61.2 percent of American adults had jobs, the highest proportion since November 2008.

While a strong number of jobs were added last month, with a half-million people streaming into the job market – not all of them found employment.

That influx meant that more people were counted as unemployed, and it boosted the jobless rate to 3.6 percent from a half-century low of 3.5 percent in December.

Americans are also buying more homes, encouraged by lower borrowing costs that stem in part from the Federal Reserve’s three interest rate cuts last year. 

In December, home construction surged to its highest level in 13 years, and in January the industry added 44,000 jobs, the largest since January 2019, after payrolls increased by 11,000 in December. 

Employment in the transportation and warehousing industry accelerated by 28,000, driven by gains in the hiring of couriers and messengers.

Payrolls in the leisure and hospitality sector increased by 36,000 jobs. Healthcare and social assistance employment rose by 47,200 jobs. There were also increases in hiring in the professional and business services, and wholesale trade industries.

But manufacturing employment declined by 12,000 jobs after falling by 5,000 in December. The industry has been the hardest hit by the U.S.-China trade war. 

Though Washington and Beijing signed a Phase 1 trade deal last month, U.S. tariffs on $360 billion of Chinese imports, about two-thirds of the total, remained in place.

Manufacturing is also being squeezed by Boeing’s suspension last month of production of its troubled 737 MAX jetliner. 

Boeing’s biggest supplier, Spirit AeroSystems Holdings Inc, said last month it planned to lay off more than 20 percent of the workforce at its facility in Wichita, Kansas because of the 737 MAX production suspension.

The mining and logging industry added no jobs last month, while retail payrolls dropped 8,300. Further job losses are likely as Macy’s announced layoffs and closures this week.

Government payrolls rose by 19,000 jobs in January, with some hiring for the 2020 Decennial census.

The job gains also give President Trump more evidence for his argument that the economy is flourishing under his watch. 

The Democratic contenders vying to oppose him, who will debate Friday night in New Hampshire, have embraced a counter-argument: That the economy’s benefits are flowing disproportionately to the richest Americans.  

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