Pay­rolls in US climb as job­less rate de­clines, wages rise

The Pak Banker - - BUSINESS -

Job growth set­tled into a more sus­tain­able pace in Jan­uary and the un­em­ploy­ment rate dropped to an al­most eight-year low of 4.9 per­cent, signs of a re­silient la­bor mar­ket that's caus­ing wage growth to stir.

The 151,000 ad­vance in pay­rolls, while less than fore­cast, largely re­flected pay­back for a sea­sonal hir­ing pickup in the fi­nal two months of 2015, La­bor Depart­ment fig­ures showed Fri­day. The job­less rate fell to the low­est level since Fe­bru­ary 2008. Hourly earn­ings rose more than es­ti­mated af­ter climb­ing in the year to De­cem­ber by the most since July 2009.

The mod­er­a­tion in hir­ing still leaves the job mar­ket on solid foot­ing and shows com­pa­nies are con­fi­dent about the out­look for do­mes­tic sales. A fur­ther tight­en­ing of la­bor con­di­tions that sparks wage gains would help as­sure Fed­eral Re­serve pol­icy mak­ers that in­fla­tion will reach its goal.

"This is a very en­cour­ag­ing re­port - - the fact that wages rose is very im­por­tant, the un­em­ploy­ment rate con­tin­ues to go lower, and job growth at 151,000 is still a good num­ber," said Kathy Bost­jan­cic, an econ­o­mist at Ox­ford Eco­nom­ics USA in New York, which is among the best fore­cast­ers of the pay­rolls data over the past two years, ac­cord­ing to data com­piled by Bloomberg. "We can't con­tinue at De­cem­ber's pace go­ing for­ward -that's not sus­tain­able."

While em­ploy­ment at tem­po­rary­help agen­cies and couri­ers de­clined in Jan­uary fol­low­ing a ramp-up ahead of the year-end hol­i­days, the la­bor mar­ket showed strength else­where.

Re­tail­ers added al­most 58,000 jobs last month, the most since Novem­ber 2014, and the health care in­dus­try took on an­other 44,000 work­ers. Per­haps most sur­pris­ing was a 29,000 gain in hir­ing at man­u­fac­tur­ers, the big­gest in­crease since Au­gust 2013.

Pay­rolls picked up at pro­duc­ers of fab­ri­cated me­tals, au­to­mo­biles, food and fur­ni­ture. Within retail, depart­ment stores and cloth­ing out­lets added a com­bined 26,500 jobs. The me­dian fore­cast in a Bloomberg sur­vey called for a 190,000 gain in over­all pay­rolls last month, with es­ti­mates rang­ing from gains of 142,000 to 260,000.

De­cem­ber pay­rolls were re­vised down to 262,000 from 292,000 and Novem­ber em­ploy­ment was re­vised up to 280,000 from 252,000. The re­vi­sions to th­ese months sub­tracted a to­tal of 2,000 jobs to over­all pay­rolls.

Fri­day's data showed a much-awaited pickup in wage growth is start­ing to man­i­fest it­self. Av­er­age hourly earn­ings rose 0.5 per­cent from a month ear­lier to $25.39. The year-over-year in­crease of 2.5 per­cent fol­lowed a 2.7 per­cent jump in the 12 months ended in De­cem­ber, which was the big­gest ad­vance since mid-2009. At least some of the in­crease was due to 14 states be­gin­ning the new year with higher min­i­mum wages. Of those, 12 in­creased their min­i­mums through leg­is­la­tion, while two states au­to­mat­i­cally boosted their wage rates through cost-of-liv­ing ad­just­ments.

Min­i­mum-wage leg­is­la­tion "may have boosted av­er­age hourly earn­ings a lit­tle bit for the month, but min­i­mum wage jobs and other cat­e­gories that are as­so­ci­ated with that are still a rel­a­tively small com­po­nent of the dis­tri­bu­tion of em­ploy­ment," said Rus­sell Price, a se­nior econ­o­mist at Ameriprise Fi­nan­cial Inc. in Detroit. The re­port also showed the av­er­age work week for all pri­vate em­ploy­ees in­creased by 6 min­utes to 34.6 hours, the long­est since Au­gust. A longer work­week of­ten amounts to greater take-home pay for many em­ploy­ees.

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