The Labor Department said Friday that employers added 304,000 jobs in January, a larger-than-expected increase that highlights the strength of the job market even as external forces — primarily weakening economies in China and Europe — threaten to hold back growth here. The unemployment rate, derived from a separate survey of households, ticked up to 4 percent last month from 3.9 percent in December, a rise the Labor Department attributed in part to the inclusion of some of the furloughed federal workers.
The last time the economy shed jobs was in September 2010, when there was a loss of 64,000 positions. Since then, the average gain has been 199,000 a month, and the average monthly pace over the past year has been a robust 234,000.
Now, I know what you are thinking: Wasn’t it just Wednesday that the Federal Reserve voted to hold interest rates steady, saying there was enough economic uncertainty out there to warrant taking a wait-and-see attitude on the direction of further rate moves? Does this very strong jobs report (economists had forecast a gain of 165,000 jobs) mean that Fed chairman Jerome Powell and his colleagues on the rate-setting Federal Open Market Committee turned dovish on rates to soon?
Fed officials say they are “data dependent,” meaning they will analyze a broad range of statistics before deciding how to proceed. They would never switch gears on just a single set of numbers.
Still, the takeaway for many investors after the Fed’s announcement was that a rate increase this year was unlikely. Megan Greene, chief economist at Manulife Asset Management in Boston, says those investors may be disappointed.
“A lot more data will come out before the Fed’s next meeting, but I suspect Powell’s tone might have been a little different if we’d had this jobs report before the last FOMC,” she wrote in an e-mail. “The markets have overcorrected on the dovish side.”
Greene notes that the “cross-currents” that Powell identified as risks to the US economy — those weakening economics overseas, plus trade tensions and the prospects of another US government shutdown and a really messy Brexit — should abate in the second half of the year.
“The Fed is data dependent now, and I think the data will justify at least one more rate hike in the second half of this year,” she said.
Stocks initially jumped following the jobs report but ended the day mixed. The Dow Jones industrial average rose 64 points, or 0.3 percent, to close at 25,063.89. The Standard & Poor’s 500 index was little changed and the Nasdaq Composite dipped 0.25 percent. The yield on the benchmark 10-year note — which moves in the opposite direction of the price — rose 0.5 percent age point to 2.686 percent.
“Today’s jobs number is another sign of the strength and resiliency of the U.S. economy and strong underlying fundamentals,” said Tony Bedikian, head of global markets at Citizens Bank.
Here are other highlights from the jobs report:
■ The Labor Department revised payrolls for November up 20,000 to 196,000, while lowering the tally for December to 222,000 from 312,000. The net change is a negative 70,000 jobs.
■ Average hourly wages rose 3.2 percent from a year earlier.
■ The labor force participation rate rose 0.5 percentage point to 63.2 percent.
■ The so-called U-6 rate (people too discouraged to look for work, plus those working part time even though they want a full-time job) rose to 8.1 percent from 7.6 percent.
■ Job gains by sector: leisure and hospitality (74,000), construction (52,000), health care (42,000), professional and business services (30,000), and manufacturing (13,000).
■ The unemployment rate for Hispanics rose to 4.9 percent, and the rate for blacks was little changed at 6.8 percent.You can reach me at email@example.com and follow me on Twitter @GlobeNewsEd. Sign up for my Talking Points AM newsletter here.