HFF Analysis of the January 2019 BLS Employment Report

Friday, February 1, 2019

HFF is pleased to report on the latest employment expansion statistics from January 2019. Our research team analyzes trends and data to give readers a better view into the current state of the economy and how employment is being affected.

Employment Expansion

The U.S. added a considerably higher than expected 304,000 jobs in January. Figures were revised downward to 222,000 in December and upward to 196,000 in November, a net revision of -70,000. Payroll creation has averaged around 202,000 since October 2010, marking the 100th month of consecutive growth. The period of monthly gains is around four years longer than the prior longest streak from 1986 to 1990.

Unemployment rose slightly to four percent, from 3.9 percent in December 2018, though analysts believe this is mostly due to the government shutdown. Unemployment has now been below five percent for 28 consecutive months and at or below four percent for 11 consecutive months.

Wage growth came in strong again at 3.2 percent. The labor participation rate increased again from 63.1 to 63.2 percent, its highest level since 2013. 

This particularly strong employment report beat consensus expectations by a considerable margin and may continue to help ease concerns about the economy.

Average Monthly Payroll Creation Steady 

The current expansion cycle similar to the 1991 to 2000 cycle and greater than the 2004 to 2007 expansionary period, but only after a significantly delayed recapture of the nation’s previous employment peak.  



Job Growth Beats Expectations

The U.S. created 2.15 million jobs in 2017 and 2.67 in 2018.* The last six years’ job growth is on par with the expansionary period from 1992 to 1995.



Job Growth Positive in Almost All Major Job Sectors

In 2018, the U.S. created 2.67 million jobs, and, in 2017, 2.15 million jobs; however, in both years, around 40 percent of private-sector job gains came from construction, manufacturing, retailers, hotels, restaurants and temporary help agencies, all typically low-paying sectors. 

Professional Business Services, the industry sector most closely aligned with office using employment, experienced expansion of 546,000 jobs, a year-over-year growth rate of 2.6 percent, above the five-year average growth rate of 2.5 percent. Temporary Staffing accounted for 80,000 (approximately 15 percent) of these positions.

Education and Health Services, which has performed well throughout the downturn being a recession-resistant industry, expanded by 522,000 jobs in the year ending January 2019. Construction added 338,000 jobs (up 4.7 percent year over year) in the year ending January 2019. Comparing this, construction added 269,000 jobs (up 3.9 percent) in the year ending January 2018.



Unemployment Rate

The Underemployment Rate augments the Unemployment Rate to include anyone marginally attached to the labor force that is either not employed or employed only part time. The Unemployment Rate rose to four percent in January 2019 marking the 28th consecutive month below five percent.

The Underemployment Rate rose to 8.1 percent in January 2019, up from 7.6 percent in December 2018. Some analysts say this may be a reflection of the shutdown’s effect on businesses the government contracts with.

Fortunately, the longer trend for the Underemployment Rate has been a descent from a 2009 high of just over 17 percent. The spread between the two rates is at 410 bps and has, overall, been compressing gradually having reached a high of 740 bps in September of 2011.



Wage Growth

As the labor force approaches “full employment,” much attention has been cast to wage growth. The current year-over-year wage growth came in at 3.2 percent in the year ending January 2019. The past three recessions were preceded by a period of FOMC tightening, which also aligns with an average hourly earnings growth in excesses of four percent, reflecting strong economic activity overall. 



*Revised numbers as of  January 2019.

Sources: HFF Research, Bureau of Labor Statistics, Department of Labor, Bloomberg

Prepared by HFF Research Analysts Laura Bancroft and Morgan Allen and HFF Managing Director of Research Jimmy Hinton

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