• Non-farm payrolls jumped up 225k in January, accelerating from a more moderate 147k in December. The unemployment rate moved up one tick to a still-low 3.6%.
  • Both goods and services sector hiring picked up on the month. Construction rose 44k, offsetting a 12k job loss in manufacturing. Manufacturing employment is little changed over the past 12 months. Health care gained 36k new positions, while transportation and warehousing rose 28k. Leisure and hospitality continued to trend up (+36k) as did business services (+21k).
  • Average hourly earnings rose only 0.2% on the month, and are now up 3.1% year/year.
  • The labor force participation rate rose two tenths to 63.4%. The core aged (25-54 years) participation rate also rose further to 83.1%, and is narrowing in on the pre-recession peak of 83.4% in early 2007.
  • January’s release also featured the annual revisions to the payrolls survey and population estimates. On net payroll gains in 2019 were reduced by only 12k positions. Most of the downward revision fell earlier in the year, with hiring from September onwards revised up slightly. The civilian non-institutional population was revised down by 811,000 in December, with downward revisions to employment and the labor force (in the household survey), such that the participation rate and unemployment rate were unaffected.

Key Implications

  • The job market got off to a solid start 2020, with a better-than-expected tally and a slight upward revision to recent months. Wage gains have been a weaker spot, but they are looking a little better in January’s numbers. Manufacturing continues to face challenges, as the sector struggles with softer global demand and past trade actions, and now will likely be hit by supply chain disruptions from the novel coronavirus.
  • On the plus side, a strong job market continues to spread the benefits of economic growth to a broader swathe of the population. With labor force participation rates in the U.S. trailing many of its advanced economy peers, we think there is room to make further gains in the year ahead.

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