U.S. job gains surge despite cautious Fed
03 February, 2019
U.S. job growth surged in January, with employers hiring the most workers in 11 months, pointing to underlying strength in the economy despite an uncertain outlook that has left the Federal Reserve wary about more interest rate hikes this year.
The Labor Department said its closely watched monthly employment report on Friday showed no “discernible” impact on job growth from a 35-day partial government shutdown, while acknowledging it was unable to quantify the effect on private industry.
But the longest shutdown in history, which ended a week ago, pushed up the unemployment rate to a seven-month high of 4.0 percent. The report came two days after the Fed signaled its three-year interest rate hike campaign might be ending because of rising headwinds to the economy, including financial market volatility and softening global growth.
The brisk pace of hiring suggested still strong momentum in the economy, a theme that was also underscored by a separate report showing a pickup in manufacturing activity in January. Wage gains, however, slowed, pointing to tame inflation.
“The Fed chickened out on further rate hikes this year and boy are they ever misreading the tea leaves on where the economy is going next,” said Chris Rupkey, chief economist at MUFG in New York. “U.S. companies have not let up one bit on their hiring in response to risks out there in the world economy.”