Job additions increased significantly in January in yet another signal that President Trump has inherited a particularly healthy economy. In fact, the labor market is nearing full employment, borne out by the decline in wage gains. However, hiring remains strong overall and there is evidence to show that more and more people are returning to join the workforce.
Meanwhile, it is widely expected that the new administration will soon be taking strong measures to boost domestic employment. Currently, retail trade, construction, financial and professional services and the restaurant sector are at the forefront of job gains. This is why investing in stocks from these areas would make for a smart choice.
Highest Job Additions in Four Months
The U.S. economy added 227,000 jobs during the month of January, significantly higher than the 157,000 jobs added during December. This also exceeds the consensus estimate of 174,000 job additions. Additionally, these are the best monthly job gains since September.
For the month of January, the retail, construction, finance and professional services sectors provided the highest job additions. Employment in the retail trade increased by 46,000 with clothing and clothing accessories stores providing 18,000 new jobs.
The construction sector added 36,000 jobs in January with residential building providing 9,000 new jobs. Employment in financial activities, professional and technical services, and food services and drinking places increased by 32,000, 23,000 and 30,000, respectively.
Wage Gains Decline
However, expectations that the economy is moving towards a full employment scenario weighed on workers’ pay, with average hourly wages rising only 0.1% in January, lower than December’s downwardly revised gain of 0.2%. Further, the unemployment rate, meantime, ticked up to 4.8% from 4.7% in January.
The reason for the slight uptick in the unemployment rate is the increase in the number of people seeking work once again. This is borne out by a 0.2 percentage point increase in the labor force participation rate which rose to 62.9%.