Northwest Arkansas Democrat-Gazette
Job growth slows in January
WASHINGTON — The U.S. economy added 151,000 jobs in January, employers raised pay and the unemployment rate dipped to 4.9 percent, the Labor Department said Friday.
The number of added jobs represented a slowdown from recent months but a sign of a solid job market that remains resilient even as the overall economy struggles in areas such as manufacturing and faces weakness overseas, economists said.
The “numbers are about momentum, so while 151,000 new jobs in January is below expectations and off pace from prior months, the data shows America’s recovery is continuing,” said Beth Ann Bovino, U.S. chief economist for Standard & Poor’s Ratings Services.
The January hiring gain, though modest, followed robust job growth of 280,000 in November and 262,000 in December, numbers that rivaled the booming 1990s. Last month, employers 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 percent and the uptick in wages show the U.S. is heading in the right direction,” Bovino said.
Douglas Holtz- Eakin, a former director of the Congressional Budget Office, suggested looking past the
slowdown in job growth 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. The Standard & Poor’s 500 index fell 35.40 points, or 1.9 percent, to end Friday at 1,880.05. The Dow Jones industrial average fell 211.61 to 16,204.97.
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 below 5 percent to its lowest level since 2008.
Average wages have jumped 2.5 percent 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 Federal Reserve, which wants to see faster earnings growth.
At least some of the increase was attributed 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.
The report also showed the average workweek 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.
“Any remaining slack in the labor market is quickly being absorbed, and the job market is tightening. Wage growth is picking up in response,” said Mark Zandi, chief economist for Moody’s Analytics. “This is all good news for the economy and suggests that the economic expansion will remain on track despite what is happening in financial markets or overseas.”
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 gasoline 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.
Manufacturers hired a solid 29,000 workers last month, even though other indicators show factory activity weakening as the rising value of the dollar and the sluggish economies of major trade partners have squeezed exports of U.S. goods. The Institute for Supply Management’s manufacturing index has been below 50 for four months, signaling contraction. Orders for factory goods plunged in 2015 — the first annual drop since 2009, when the economy was just emerging from recession.
The health care sector added a sturdy 44,000 jobs last month.
But other sectors of the economy hit a speed bump in January. Education services — an area sheltered from the global economy — shed 38,500 workers after steady gains in prior months.
The transportation and warehousing sector downsized by 20,300, likely letting go of seasonal workers after the Christmas shopping rush ended. The U.S. Postal Service also parted with 6,000 jobs.
Yet the most notable decline was in temporary workers, whose ranks fell by 25,200 in January. The decrease could indicate that companies are wary that the economy can continue its 6½-year-old expansion at its previous pace. Corporate profits are declining and goods are piling up on warehouse shelves.
Those trends have elevated concern among some that a U.S. recession may loom in the next year or two.
Most analysts say that while the economy may slow this year compared with 2015, an outright recession remains unlikely. Economists at Bank of America Merrill Lynch have put the odds of a recession within the next 12 months at 20 percent. While still low, that estimate is up from 15 percent last year.
President Barack Obama said on Friday that the nation’s unemployment rate is evidence his economic policies have succeeded.
“The United States of America right now has the strongest, most durable economy in the world,” Obama told reporters at the White House. While more people are joining the labor force, too many Americans are still shut out of the economy because of aftereffects of the recession that ended in mid-2009, Obama said.
“Some of this is still the hangover from what happened in 2007, 2008, and this is part of the reason why we have to keep our foot to the accelerator,” he said.