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Hiring revs up in January, unemployment increases

Hiring boomed in the U.S. in January even as the unemployment rate edged up during the record 35-day government shutdown.

The economy added 304,000 jobs in the month, easily surpassing the monthly average for 2018 at 223,000, the U.S. Department of Labor reported.

jobsreportThe unemployment rate moved to 4 percent, up from 3.9 percent in December. Furloughed federal employee were classified as unemployed on temporary layoff, according to the Labor Department. Unemployment had been under 4 percent at near 50-year lows for six consecutive months prior to January.

Mortgage Bankers Association Chief Economist Mike Fratantoni said that another strong month of hiring is good news for the housing and mortgage industries. Job gains have averaged 241,000 per month over three months.

“Although the partial government shutdown may have temporarily increased the unemployment rate, this pace of job creation will continue to support higher wages, which will in turn support strong housing demand,” Fratantoni said. He also noted that the Federal Reserve this week signaled it will be less aggressive in raising rates this year.

“Mortgage rates are likely to remain stable,” Fratantoni said. “Stable rates and growing wages are a good combination for potential homebuyers.”

 Hiring increased dramatically in the retail and service industries, such as restaurants, bars and leisure activities. The leisure and hospitality sector saw 74,000 net job gains, and retail trade added 21,000.  

Fannie Mae Chief Economist Doug Duncan said the the latest data confirms that the labor market is strong, and supports its forecast for one rate increase from the Fed in June. He also noted the uptick in residential construction employment was the highest since February 2018, which is a good sign for the market in 2019.

"The additional jobs suggest that positive housing construction activity will continue, helping to alleviate the for-sale housing shortage," Duncan said. Fannie's consumer polling suggests that a lack of inventory was the primary reason home sales were tepid last year, Duncan said. 

Other sectors adding jobs included construction (52,000); healthcare (42,000); transportation and warehousing (27,000); professional and business services (30,000); and manufacturing (13,000); and mining (7,000).

Wage-growth cooled down  in January. Hourly wages increased just 3 cents to $27.56, after increasing by 10 cents in December.

Also less positively, December’s hiring was not as strong as first believed. The employment gains in December were revised down by 90,000 to 222,000. November’s figure was revised up by 20,000 jobs to 196,000. So, with these revisions, there were 70,000 fewer jobs created in November and December than previously reported. 


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