Home News US Unemployment Rate Climbs to 4.0 Percent in January 2019

US Unemployment Rate Climbs to 4.0 Percent in January 2019

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By: Alessandra Yuan – Forex Focus

Temporary layoffs rise on the back of the partial US Government shutdown.

The unemployment rate in the United States climbed to 4.0 percent in January, the highest since June 2018 and marginally higher than the 3.9 percent recorded in December of last year. Reported by the U.S. Bureau of Labor Statistics, the jobless rate came in slightly above analysts’ expectations of 3.9 percent, as the number of unemployed personnel in the country increased by 241,000 month-on-month to 6.54 million, while employment fell by 251,000 to 156.69 million.

According to the figures reported by the U.S. Department of Labor, both the unemployment rate and the rise in the number of unemployed persons was led by the partial federal government shutdown, which began on December 22 of last year and lasted for five weeks, after the $5.7-billion spending bill proposed by President Donald Trump’s administration to construct a wall across the US-Mexico border was rejected by the Congress. The impact of the shutdown was largely felt in the temporary layoff numbers, which rose by 175,000 due to the inclusion of federal government employees, who were sent home on leave as a result of the shutdown. The figure for the number of long-term unemployed workers, or those without a job for 27 weeks or more, was mostly unchanged at 1.3 million, which accounted for about 19.0 percent of the total unemployed.

In a separate announcement later in February, the Job Openings and Labor Turnover Summary (JOLTS) report published by the labour department showed that seasonally adjusted job openings in the United States reached record highs of 7.3 million in December of last year, beating market expectations of 6.9 million and above November’s revised job-opening figure of 7.16 million. The monthly report, which is an indication of labour demand, expanded by 169,000, pushing the job openings rate to 4.7 percent from 4.6 in November of last year. The rate of hiring continued to lag vacancies, reflecting a tightening labour market, leading to a widening in the gap between the two, last observed in 2015. Vacancies at private-sector enterprises were the greatest, with job openings rising by 198,000, led by 88,000 in the construction sector alone and followed by food and accommodation, healthcare and social assistance. Job openings for individuals looking to be employed by the federal government fell by 32,000, while openings in the non-durable manufacturing sector and real estate, rental and leasing dropped by 37,000 and 31,000 respectively.

With the labour market expanding for the 100th straight month, a survey of small companies in January showed that the single biggest problem for about 25 percent of business owners was finding skilled workers. While the number of companies hiring employees in December was mostly unchanged at 5.9 million, the hiring rate was at 3.9 percent. Likewise, the number of total separations was also little changed at 5.5 million or 3.7 percent in the four geographic regions of the country. In the 12 months to December 2018, the total number of individuals finding employment rose to 68.5 million, while total separations accounted for 65.9 million, resulting in a net employment surplus of 2.6 million.


As the labour market continues to heat up, the ongoing shortage of qualified workers if not filled quickly is likely to impact the country’s economic growth, which has expanded for more than nine years, the second longest period on record. According to market experts, the unemployment rate in the US is likely to dip further to 3.5 percent in 2019 from 3.7 last year before rising moderately to 3.6 percent in 2020.

Employment growth continues to expand across industries, with the impact of the partial federal government shutdown being limited to the 0.1-percent rise in the unemployment rate in January. Non-farm payrolls rose by 304,000 in January, the highest since February of last year and beating market expectations of an increase of 165,000. The labour-force participation rate, too, edged higher in January to more than five-year highs of 63.2 percent from 63.1 percent in December of last year. According to ADP Research Institute, average wages in 2018 registered an increase of about 5.8 percent for individuals switching jobs and by 4.7 percent for those choosing to stay at their current workplaces. The rise in wages was reported across sectors, with hourly wages for women increasing at a faster pace than men. In addition to better wages, employers were seen bolstering benefits to include flexible working hours and other perks to attract and retain talent.

While the US labour market remains robust, with the number of job openings rising more than the number of unemployed individuals, it is bound to boost the all-round development of employees as companies compete with one another in search of skilled workers.


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