As weather watchers were preparing for Groundhog’s Day, economists were equally focused on whether the shadow of the government shutdown would impact the January employment report. They need not have worried. The labor market was positively perky in January. 304,000 jobs were added in the first month of the year, much more than the consensus estimate of 190,000. It was the 100 straight month of job creation and an uptick from the revised December reading of 222,000 and from the 2018 monthly average of 223,000.
Because the Bureau of Labor Statistics had already confirmed that the 800,000 Federal workers going unpaid during the shutdown would still be counted as employed, the shutdown didn’t impact the job creation numbers, but it did mess with the unemployment rate, which edged up to 4 percent, the highest since June 2018. (The small increase is largely attributed to the way the BLS treated furloughed government workers – they were considered part of the labor force, but not with jobs, so that probably nudged the rate higher.)
There was more good news inside the report. Average hourly earnings matched the 9-year high of 3.2 percent seen in December and non-supervisory workers (the vast majority of folks who hold jobs) saw annual wage growth of 3.4 percent in January, the highest annual jump in nearly a decade. Finally, this was the month when the BLS report revised the whole year, the effect of which increased total non-farm employment for 2018 from 2,638,000 to 2,674,000.
The strength of the January report underscores that despite the shutdown, the lack of clarity around U.S.-China trade talks and the uncertainty of Brexit, U.S. economic growth remains solid enough to keep creating jobs. The positive report along with the Federal Reserve’s statement that it would remain “patient” and would wait to see “what future adjustments to the target range for the federal funds rate may be appropriate,” was enough to boost stock market indexes by more than one percent on the week.
Super Bowl and markets: Most market indicators are malarkey, but they’re also fun. So here’s one for the big game. The Super Bowl indicator suggests that stocks rise for the full year when the Super Bowl winner comes from the original National Football League (now the NFC), but when an original American Football League (now the AFC) team wins, stocks fall. So stock investors should root for the Rams, right? According to LPL Research, this stuff is silly, “but the data don’t lie, the S&P 500 Index has performed better, and posted positive gains with greater frequency, over the past 52 Super Bowl games when NFC teams have won. Of course, it’s worth noting that this didn’t work last year when the Eagles won the Super Bowl, and the S&P 500 lost 6.2 percent in 2018.