Jobs Report and the Monthly Employment Growth Statistics
Where the 304,000 Jobs Were Added in January
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.
Industries That Lost Jobs
Information services lost 4,000 jobs. This sector, especially Silicon Valley, is critical to American global competitiveness. Utilities lost 500 jobs.
The U.S. Jobs Report Explained
The monthly jobs report is also called the "Employment Situation Summary" and the "Non-Farm Payroll Report." It's a critical economic indicator because it's the first report of the month. It's also the most comprehensive and credible.
The Bureau of Labor Statistics surveys 160,000 non-farm businesses and agencies on the number of jobs, the wages paid, and the hours worked. The jobs report will tell you which industries are adding jobs, whether American workers are working longer hours, and how fast salaries are increasing.
The jobs report also provides the unemployment rate. To get the number of unemployed individuals, the BLS must undertake a separate survey of households instead of businesses. This household report also includes workers' age, sex, and race/ethnicity. The household survey has a more expansive scope than the establishment survey. It includes the self-employed, unpaid family workers, agricultural workers, and private household workers. They are excluded by the establishment survey.
The household survey is not as accurate as the business establishment, though. It has a smaller sample size. That's why employment numbers are taken from the establishment survey. So the current unemployment statistics show a different trend than the jobs report.
Other Jobs Reports
There are two other jobs reports. The monthly ADP National Employment Report® is released on the first Wednesday of each month. It's produced by the ADP Research Institute, SM and Moody’s Analytics. It uses business payroll data to report on the number of jobs added in the private sector. It excludes farming, as does the BLS report. But more importantly, it also excludes government jobs, which are included in the BLS report. For that reason, it's considered incomplete.
The ADP Report is useful because it's released the Wednesday before the BLS report. It gives some analysts an earlier view of what might happen in the Friday report. ADP is quick to say it's not intended to be predictive. Like the BLS report, it's revised as more data comes in later in the month. These revised numbers are 96 percent correlated with the revised BLS jobs report.
The Department of Labor also releases a weekly jobless claims report. This measures the claims for initial unemployment benefits reported by each state every week. It also says how many of the unemployed are still receiving benefits. This report gives an indication of trends, whether there are more or less of the unemployed than the week before. The main value of this report is that it is weekly and so it gives some idea of trends between the monthly jobs reports. It isn’t accurate when predicting the monthly report because it is volatile.