January adds 225,000 jobs; unemployment edges up as more Americans seek work

FILE - In this Oct. 1, 2019, file photo, Gory Rodriguez, of Starbucks, right, interviews a job applicant during a job fair at Dolphin Mall in Miami. The January U.S. jobs report on Friday, Feb. 7, 2020, may provide timely evidence of the U.S. economy's enduring health. (AP Photo/Lynne Sladky, File)
FILE - In this Oct. 1, 2019, file photo, Gory Rodriguez, of Starbucks, right, interviews a job applicant during a job fair at Dolphin Mall in Miami. The January U.S. jobs report on Friday, Feb. 7, 2020, may provide timely evidence of the U.S. economy's enduring health. (AP Photo/Lynne Sladky, File)

WASHINGTON -- U.S. hiring jumped last month, and many more people were encouraged to look for work, showing that the economy remains robust despite threats from China's viral outbreak, an ongoing trade war and struggles at Boeing.

The Labor Department said Friday that employers added a solid 225,000 jobs in January. At the same time, a half-million Americans, feeling better about their job prospects, streamed into the job market. Most found jobs. But those who didn't were newly counted as unemployed, and their numbers raised the jobless rate to 3.6% from December's half-century low of 3.5%.

The areas of strongest job growth came in construction, health care, as well as transportation and warehousing, according to the Bureau of Labor Statistics. Retail and manufacturing were the two areas with the most significant job losses.

"I can say that it pretty much blew estimates out of the water," said Beth Ann Bovino, the U.S. chief economist at S&P Global. "It's just a really nice report. I'd also say that the recession fears of last year seem to be a thing of the past when you look at this report."

Hiring has picked up from earlier this year, when the trade war with China raged, and is helping remedy one of the economy's key weaknesses: Even as the unemployment rate fell from a peak of 10% in 2009, millions of Americans were discouraged about finding jobs and stopped looking. Some returned to school or stayed home to care for relatives.

Yet that trend has nearly reversed itself since 2016. The proportion of Americans in their prime working years -- ages 25 through 54 -- who either have a job or are looking for work has reached its highest point since September 2008, just before the recession intensified. Economists typically focus on the prime-age population because it filters out the effects of retirement among the vast baby boomer generation.

The Labor Department also released data Friday showing that 514,000 fewer jobs were added between April 2018 and March 2019 than originally thought. The initial data reported each month in the jobs report comes from a survey sample of businesses to see how many people were added or subtracted from payrolls. The revised data encompasses nearly all businesses in the United States, but it takes longer to gather the information, which is why there is a delay in releasing it.

January's numbers may have been helped by unusually warm winter weather in much of the country, which lifted employment in construction, hospitality and other weather-sensitive sectors.

And analysts warn that hiring could slow in the coming months. January's jobs report was compiled before the spread of the coronavirus, which has sickened thousands in China, closed stores and factories there and led many international businesses to suspend operations involving China.

And Boeing's decision to halt production of its troubled 737 Max has yet to affect overall job growth. But some Boeing suppliers have announced layoffs that could be felt in next month's jobs report.

Meanwhile, officials in President Donald Trump's administration have been stressing that the job market is now benefiting a wider range of demographic groups.

"We have seen Hispanics, African-Americans, Asians, young people, women -- all ... are either at their all-time employment lows or very nearly so," Larry Kudlow, the White House's top economic adviser, said Friday.

Trump also has been touting a "blue collar boom," though the evidence for that is mixed. Manufacturers lost jobs in January for the third time in four months. The employment report shows that if there is such a boom, it is among construction and transportation and warehouse workers, who accounted for nearly one-third of last month's hiring. These jobs often pay less than factory jobs of the past.

Wages also are a mixed bag. Hourly pay rose 3.1% in January from a year earlier, a decent pace but below a peak of 3.5% reached last summer. The last time the unemployment rate fell below 4%, in the late 1990s, wages were rising much faster -- about 4.5% annually.

Still, pay is picking up for many low-income workers. For the poorest one-quarter of workers, wages rose 4.6% year over year in December, the most recent month for which data is available, compared with 3% for the richest quarter, according to the Federal Reserve Bank of Atlanta.

Those gains began in 2015 and have been fueled in part by higher minimum wages in many states.

Despite the progress for low-wage workers, however, overall wage growth remains disappointing, as it has for much of the decade-long expansion.

"The moderation in wage growth is the big question," said Julia Coronado, president of MacroPolicy Perspectives, an economics consulting firm. "It's everything."

The growth of the labor force is good news for workers because it means the strong economy is providing opportunities to people who were left out of the early stages of the recovery. And it is good news for the broader economy, because it means that companies can keep adding jobs without running out of workers.

"It means we don't have to settle for a lower pace of job growth," said Michelle Meyer, chief U.S. economist for Bank of America Merrill Lynch. "Not only is there demand for labor, there's supply to fill that demand, and that's a very positive narrative."

The jobs report is the first since Trump signed the U.S.-Mexico-Canada Agreement in January, and weeks after Trump signed a partial trade deal with China, ending months of uncertainty over some of his major economic proposals. Some experts suggested the trade deals helped shore up confidence among companies last month.

"It's not a stretch to connect progress on things like [the U.S.-Mexico-Canada pact] and the China deal to restoring a sense of certainty," said Neil Bradley, the chief policy officer for the U.S. Chamber of Commerce.

Economists are not sure what is behind the recent cooling in wage growth or whether it will continue. It may be an early sign that the job market is weakening more than the headline jobs numbers suggest. Employers in recent months have posted fewer job openings, and the average workweek has shortened.

"It really seems like we are seeing some slowdown in employer demand for workers and hours, and that means a bigger dent on people's take-home pay," said Julia Pollak, a labor economist for the employment site ZipRecruiter.

The industrial slump that began last year continued in January. Manufacturers cut 12,000 jobs, with most of the losses coming among automakers, and employment also dipped in the mining sector. Job growth in freight transportation also was weak, the latest evidence that the ripple effects of the trade war are continuing to spread.

Seven Democratic presidential candidates were debating Friday night in New Hampshire. Leading contenders, notably Sens. Bernie Sanders and Elizabeth Warren, have built campaigns around the argument that the middle class has been mostly left out of an economic expansion that has disproportionately served the wealthy.

"Democratic primary voters are very open to messages about the economy doing badly," said Jason Furman, a top economic adviser to former President Barack Obama, said.

Furman added, though, "I don't know that that would be consistent for the electorate as a whole."

Information for this article was contributed by Christopher Rugaber of The Associated Press; by Ben Casselman of The New York Times; and by Eli Rosenberg and Heather Long of The Washington Post.

A Section on 02/08/2020

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