Market Overview

US Adds 225K Jobs In January, Labor Participation Rate Rises

US Adds 225K Jobs In January, Labor Participation Rate Rises

The Bureau of Labor Statistics released employment data for the month of January, and the jobs report came in above economists expectations.

Here’s a rundown of everything you need to know.

What You Need To Know About The Jobs Report

The nonfarm payroll number came in at +225,000, well above consensus economist expectations of +158,000.

The unemployment rate increased 0.1% to 3.6%, but the labor participation rate also increased 0.2% to 63.4%, its highest level since 2013. The so-called “real” unemployment rate, which factors in those out of the workforce and those who are underemployed, increased 0.2% to 6.9%.

Wage growth also came in slightly above expectations, up 3.1% from a year ago.

The construction industry led the gains in January by adding 44,000 jobs, more than any other industry. The manufacturing sector struggled once again in January, losing 12,000 jobs on the month after gaining just 57,000 jobs total in 2019.

In addition to the strong January numbers, the Labor Department also revised its jobs growth estimates for the last two months lower as well. The Labor Department added 5,000 jobs to its November estimate and 2,000 jobs to its December estimate, bringing the revised monthly totals up to +261,000 and +147,000, respectively.

Market Reaction To The Jobs Report

The U.S. economy has now added jobs for 112 consecutive months, by far the longest streak in history (48 months from 1986 to 1990).

Investors initially reacted negatively to the jobs numbers, with the SPDR S&P 500 ETF Trust (NYSE: SPY) trading down by 0.3% in premarket trading.

David Bahnsen, chief investment officer of The Bahnsen Group, said the growing labor force participation rate is the best part of the jobs report.

"That is the metric that has been on a secular decline and that is the number reflecting growth and improvement. The message in the data is this: more people are seeing themselves as part of the workforce (63.4% - highest in seven years),” Bahnsen said.

Bahnsen was also encouraged by the wage growth number.

“The 3.1% year-over-year wage growth continues to outpace expectations, put money in consumers pockets, and yet, not remotely indicate pending inflation,” he said.

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