U.S. job growth surged in January, with employers hiring the most workers in 11 months, pointing to underlying strength in the economy despite a darkening outlook that has left the Federal Reserve cautious about further interest rate hikes this year.
The Labor Department’s closely watched monthly employment report showed no “discernible” impact on job growth from a 35-day partial government shutdown. 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 slowing global growth.
Nonfarm payrolls jumped by 304,000 jobs last month, the largest gain since February 2018, the Labor Department said. Job growth was boosted by hiring at construction sites, retailers and business services as well as at restaurants and hotels.
But data for November and December was revised down to show 70,000 fewer jobs created than previously reported. The economy needs to create roughly 100,000 jobs per month to keep up with growth in the working-age population.
Economists polled by Reuters had forecast payrolls increasing by 165,000 jobs in January.
The government shutdown saw about 380,000 workers furloughed but President Donald Trump signed a law guaranteeing these employees back pay. As a result, these workers were included in the January payrolls count in the survey of employers.
The furloughed workers were, however, considered unemployed on “temporary layoff” in the separate household survey from which the jobless rate is calculated. This pushed up the unemployment rate by one-tenth of a percentage point from 3.9 percent in December.
The shutdown ended last Friday after Trump and Congress agreed to temporary government funding, without money for his U.S.-Mexico border wall.