The labor market was the strong point of the US economy in the last quarter of 2015, with an average of 284,000 jobs added in the last three months of the year.
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Friday’s Labor Department report showed that the USA job market remains resilient even as the overall economy is struggling in areas such as manufacturing and facing severe weakness overseas.
While many economists say a slowdown is coming, most analysts believe an outright recession is unlikely.
On its own, the symbolic drop to 4.9% unemployment in today’s jobs report isn’t a major factor in how to read the labor market.
The manufacturing industry added 29,000 jobs.
The combination of rising pay with a slower pace of hiring and downward pressure on prices from a stronger dollar complicates the picture for the Federal Reserve as it contemplates the timing of its next interest rate increase.
That’s because lower unemployment throughout this recovery has in part been driven by people dropping out of the labor force and no longer being counted.
“I should mention, by the way, that since I signed Obamacare into law, almost 18 million Americans have gained coverage, and our businesses have created jobs every month since”.
The unemployment rate is projected to stay steady at 5%, where it has been since October. This tied California with Arizona as having the 10th worst unemployment rate among USA states.
Nationwide, retailers added nearly 58,000 jobs last month, the most since November 2014, and the health care industry took on another 44,000 workers.
Nonfarm payrolls probably increased by 190,000 jobs last month, according to a Reuters survey of economists. In January, average hourly earnings of private sector production and non-supervisory employees rose by 6 cents to $21.33. There’s always churn – labor-market friction, with people switching jobs – as well as structural mis-matches – unskilled workers or those with poor work histories who have trouble finding anything, and positions requiring specific skills or credentials that employers have trouble filling.
The Labor Department also said the unemployment rate edged down to 4.9 percent in January from 5.0 percent in December, while economists had expected the rate to come in unchanged. “Moreover, we have seen meaningful improvements in the participation rate over the past six months which suggests that more sidelined workers are being brought back into the labor pool”.
Against the backdrop of tightening financial market conditions, a deceleration in employment growth would further undercut the case for a Fed interest rate hike in March. The year-over-year increase of 2.5 percent followed a 2.7 percent jump in the 12 months ending in December, which was the biggest advance since mid-2009.
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While the Fed’s rosy forecasts for 2016 now seem premature, a solid January jobs report suggests that all is not gloom and doom for the USA economy. It’s a point of equilibrium where most workers can find the jobs they want and are qualified for, and most employers can find the workers they need. And temporary help services, often a harbinger of future hiring, shrunk by more than 25,000 posts.
