The U.S. economy added 227,000 non-farm payroll positions in January, according to today’s monthly employment report released by the Bureau of Labor Statistics (BLS). This seasonally adjusted figure marks a 44.6% increase from December’s upwardly revised addition of 157,000 jobs, and significantly exceeds the Wall Street Journal‘s expectation of 174,000 positions.
The national unemployment rate rose marginally from December’s 4.7% to 4.8% in January. According to the Wall Street Journal, a rising unemployment rate could “suggest [that] workers who dropped out of the labor force are returning and that the labor market has yet to reach full strength.” The labor-force participation rate also rose by 0.2 percentage point in January to 62.9%.
January’s strong report could have implications for potential homebuyers, as it is anticipated it will put pressure on the Federal Reserve to continue to raise interest rates. Wage growth was the biggest headline from December’s employment report, as average hourly earnings rose 2.9 percent from a year prior, the largest 12-month gain since 2009. All employees on private non-farm payrolls saw continued wage growth in January, with average hourly earnings increasing by $0.03. Wages have increased 2.5 percent from a year prior, but the continued growth comes as no surprise, as the minimum wage increased in 19 states at the start of 2017.
The construction industry added 36,000 jobs in January, following two months of marginal growth. Residential construction employment added 9,000 jobs in January, while employment in nonresidential construction saw a bump of 3,900 jobs. The manufacturing sector continued its rebound from months of decline last month, adding 5,000 jobs. Meanwhile, payrolls in the architectural and engineering services sector added 5,900 positions in December, marking the third consecutive month of growth.
“Job growth is critical in a rising interest rate environment,” said Lawrence Yun, chief economist for the National Association of Realtors in a statement reacting to the Labor Department release. “Every 10 basis point rise in mortgage rates can shave off approximately 35,000 in home sales annually. That is why today’s solid job addition of 227,000 is very comforting.”
Yun continued, “One thing of note is the solid increase of 36,000 in construction jobs. With 170,000 construction jobs added over the last 12 months, builders are increasing capacity, which should translate into continued home building. This is necessary to help increase the low housing inventory in much of the country.”
Read the full report here.
