Modest job increases in U.S. show resilient economy

WASHINGTON — The U.S. economy added 151,000 jobs in January, a slowdown from recent months but still a sign of a solid job market. Employers raised pay, more people felt confident enough to look for work and the unemployment rate dipped to 4.9 per cent, its lowest level since 2008.

Friday’s Labor Department report showed that the U.S. job market remains resilient even as the overall economy is struggling in areas such as manufacturing and facing severe weakness overseas. The report provides a key piece of evidence for the Federal Reserve, which is weighing whether to raise interest rates again in the face of global risks after lifting rates from record lows in December.

The January hiring gain, though modest, followed robust job growth of 280,000 in November and 262,000 in December. Last month, companies shed education, transportation and temporary workers, but stepped up hiring in manufacturing, retail and food services.

Aside from the slowdown in overall hiring, economists were encouraged by most other aspects of the report.

“Positive job growth, the drop in the unemployment rate to 4.9 per cent and the uptick in wages show the U.S. is heading in the right direction,” said Beth Ann Bovino, U.S. chief economist at Standard & Poor’s.

Douglas Holtz-Eakin, a former director of the Congressional Budget Office, suggested looking past the tepid overall job gain to focus instead on the more reassuring figures for pay, the unemployment rate and the rising number of people who feel now is a good time to look for work.

“The January report is a solid report in disguise,” said Holtz-Eakin, president of the conservative American Action Forum.

Still, stock investors greeted the jobs report with sharp losses.

In New York, the Dow Jones industrial average slumped 211.75 points to 16204.83, while the broader S&P 500 declined 35.43 points to 1880.02.

The number of people working or seeking work rose last month, while the number of unemployed slipped from 7.9 million to 7.8 million, which caused the unemployment rate to dip from 5.0 per cent.

Average wages have jumped 2.5 per cent over the past 12 months to $25.39 an hour, evidence that the past years of job growth are finally helping to generate pay raises — a crucial indicator for the Fed, which wants to see faster earnings growth.

The income growth meshes with retailers hiring a seasonally adjusted 57,700 workers. Restaurants and bars added 48,800 jobs in a sign of robust consumer demand.

With low gas prices leaving more money in people’s wallets and borrowing costs low, most economists expect Americans to spend at a decent pace this year and bolster economic growth.