The American economy expanded by 225,000 jobs in January, beating the expectations of economists. More detailed data, however, showed that the 2018 job growth was weaker than expected, leaving room in the labor force for still more expansion.
The job growth was strongest in construction, but also solid in hospitality, healthcare, education, transportation, and warehousing. The total handily beat the 160,000 payroll rise forecast by economists polled by Reuters.
The Bureau of Labor Statistics, which releases the official data every first Friday of the month, also published on Feb. 7 revisions of the employment data which revealed non-farm employment level 0.3 percent lower than previously reported. The revision mostly affected 2018, when job growth rose by about 2.3 million jobs, some 350,000 less than previously reported. For 2019, job growth was revised down by 12,000 jobs.
Despite the revision, the unemployment rate barely budged in January, up to 3.6 percent from 3.5 percent in December.
The labor force participation rate, which measures the share of adults who work or sought jobs in the past four weeks, increased to 63.4 percent, the highest in about seven years.
Coronavirus and China Trade Deal
Manufacturing has taken a hit in the past year due to escalating U.S.-China tariffs. The economy lost 12,000 manufacturing jobs in January, though the number is still up by 26,000 from January 2019.
The situation was about to improve as President Donald Trump signed a first-phase trade deal with China on Jan. 15. Beijing committed to buy $200 billion in U.S. products over two years.
The deal will go into effect on Feb. 14, but the recent spreading of the Novel Coronavirus that has killed hundreds across China has threatened the economic outlook.
“The export boom from that trade deal will take longer because of the Chinese virus. That is true,” said Larry Kudlow, White House economic adviser.
American manufacturers, however, should still get the benefits of the United States-Mexico-Canada Agreement (USMCA), Kudlow said, noting that the outbreak will have a “minimal” impact on the U.S. economy overall.
Meanwhile, U.S. Treasury pulled in nearly $46 billion in the China tariffs, according to data from U.S. Customs and Border Protection (CBP).
The bilateral trade was mostly affected in the China to U.S. direction, collapsing from nearly $540 billion in 2018 to just about $450 billion in 2019. U.S. exports to China, on the other hand, dropped by only about 13.5 billion to roughly $107 billion.
On Feb. 6, China said it would halve some of its tariffs levied against about $75 billion of U.S. imports in retaliation to Trump’s tariffs last year.
The American economy has been in a historically long expansion after the 2008 recession. Particularly in the past three years, the economy benefited from Trump’s cutting of taxes and regulations.
Reuters contributed to this report.