U.S. hiring accelerates, but virus fears persist

Renewed concerns Friday that the outbreak in China will slow global growth overshadowed fresh signs of a strong labor market.

JOBS

U.S. hiring jumped last month, and many more people were encouraged to look for work, showing that the economy remains robust despite threats from China’s viral outbreak.

ECONOMY

But the Federal Reserve Board warned that the coronavirus outbreak presented a “new risk” to the economic outlook for the U.S. and warned of disruptions in global markets.

STOCKS

Stocks fell Friday, breaking a four-day winning streak, as worries persisted over the virus’ impact on the Chinese economy. The Dow Jones Industrial Average closed 277.26 points lower, to 29,102.51. »

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What happened

Employers added 225,000 jobs in January, the Labor Department reported Friday. Forecasters had expected a gain of about 164,000.

Hiring had slowed somewhat last year amid trade tensions and recession fears, but the job market has proved resilient. Now, with the recent abatement in the trade war, those concerns have eased, and hiring has rebounded. The unemployment rate was 3.6%, up from 3.5% in December but still near a half-century low.

“You still have headwinds of tariffs, you still have headwinds of trade uncertainty, but those headwinds have been lessened,” said Ellen Zentner, chief U.S. economist for Morgan Stanley.

Negative factors

There are still some clouds in the economic sky. The shutdown in production of Boeing’s 737 Max aircraft is rippling through supply chains, retailers are laying off workers, and the new coronavirus could have widespread — though still hard to quantify — economic effects. Manufacturers and retailers cut jobs in January, and most economists expect hiring to continue its gradual slowdown this year.

And a major annual revision in the jobs report showed that 2018 and early 2019 produced more than half a million fewer jobs than previously reported.

What it means

Still, this is, by many measures, the best environment for workers in years. Employers are hiring candidates with disabilities, criminal records and other barriers to employment, and are offering flexible schedules and other perks to draw workers off the sidelines. Average hourly earnings were up 3.1% from a year earlier, with wages rising fastest for people at the bottom of the earnings ladder.

Slow wage growth

Despite the progress for lowwage workers, however, overall wage growth remains disappointing, as it has for much of the decadelong expansion. A brief acceleration in wage growth in 2018 prompted hopes that the tight labor market was finally giving workers more bargaining power with employers. But wage growth has slowed again, although it picked up a bit in January.

“The moderation in wage growth is the big question,” said Julia Coronado, president of MacroPolicy Perspectives, an economics consulting firm. “It’s everything.”

The unemployment rate ticked up in January to 3.6%, but the rise doesn’t suggest any trouble in the job market. In fact, the opposite: The rate increased because more people joined the labor force to look for work.

“It means we don’t have to settle for a lower pace of job growth,” said Michelle Meyer, chief U.S. economist for Bank of America Merrill Lynch. “Not only is there demand for labor, there’s supply to fill that demand, and that’s a very positive narrative.”

LYNNE SLADKY / ASSOCIATED PRESS Gory Rodriguez (right) of Starbucks interviews an applicant during a job fair in October in Miami. The January U.S. jobs report that came out Friday offered evidence of the U.S. economy’s enduring health.