The U.S. economy gained 304,000 jobs in January 2019, according to the U.S. Bureau of Labor Statistics. The economy needs 150,000 new jobs each month to keep expanding. Strong growth means the Federal Reserve will probably continue raising interest rates at its future 2019 Federal Open Market Committee meetings.
Where the Job Growth Came From
Leisure and hospitality gained 74,000 jobs. Most of these workers are hourly employees. The sector adds from 20,000 to 30,000 positions a month.
Health care added 45,400 jobs. The industry remained a strong performer even during the recession. Trump’s changes to health care initially dampened employers’ confidence. On average, this sector adds over 30,000 jobs a month.
Transportation and warehousing added 26,600 jobs.
The retail industry added 20,800 jobs due to the holiday shopping season. Store managers had been slashing jobs since March 2017. Online sales have cut into bricks-and-mortar store sales. Wholesale, which usually trends with retail, increased by 4,700 jobs.
U.S. manufacturing gained 13,000 jobs despite the strong dollar and Trump’s trade war. A strong dollar hurts exports. Countries in a trade war impose tariffs and international trade declines. Durable goods gained 20,000 jobs. Auto manufacturing added 700 jobs.
Pay close attention to how many manufacturing jobs are added or lost each month. This is a significant leading economic indicator. Factories add workers as soon as they receive a large enough order. It could take months or even years before the order ships and shows up in economic output. Manufacturing is a better indicator of recession than the service sector, whose job levels remain consistent through the boom-and-bust cycle.
Financial activities gained 13,000 jobs. Banks are adding positions after the Fed began raising interest rates. Higher rates bring greater profitability to lenders because they can charge more for loans.
The government added 8,000 positions despite the federal government shutdown. Furloughed government employees were counted as employed. Many departments were not shut down and so could continue to hire new workers.
The mining industry, which also includes the oil industry, added 7,000 jobs. It was affected by a drop in oil prices. Excess supply from U.S. shale oil producers is lowering prices. OPEC is struggling to limit its output. As a result, future oil prices are expected to remain subdued.
Temporary help services added 1,000 jobs. Companies often add temp jobs when business is picking up, but they aren’t confident enough to add full-time positions.