Economy Adds 200k Jobs in January; Unemployment Rate remains 4.1%; Earnings Contract

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • Number of payroll jobs INCREASED 200,000 in February compared with working age population growth of 671000;
  • Prior month job totals REVISED DOWN net 24,000: UP 12,000 in December to a gain of 160,000 (from the initial report of a 148,000 increase) but DOWN 36,000 in November to a revised growth of 216,000 jobs (from 252,000);
  • Average weekly earnings FELL $2.25 to $917.18, a 2.5 percent year-year gain DOWN from December’s 2.9 percent year-year growth;
  • Unemployment rate in December remained at 4.1 percent;
  • The number of persons holding multiple jobs ROSE 198,000 in January, accounting for most of the month’s increase in jobs;
  • Average hourly earnings GREW 9¢, a 2.8 percent year-year growth;
  • Average weekly hours fell to 34.3, contributing to both the drop in weekly wages and the increase in jobs;
  • The labor force (the sum of employed and unemployed) was 161.1 million in January, up about 518,000 from December;
  • Labor force participation rate – a key determinant of economic growth – was UNCHANGED from November at 62.7 percent
  • Employment GREW 104,000 in December; unemployment DECREASED 40,000;
  • The number of persons not in the labor force was 95.7 million in January, up from 95.5 million in December but the numbers are not directly comparable because of the “population controls” BLS uses each January, adjusting numbers for changes in population;
  • Private sector payrolls ROSE 196,000 in January;
  • Employment-Population ratio remained at 60.1 percent;
  • Number of construction jobs INCREASED 60,000, with 19,000 new residential construction jobs;
  • Health care and leisure-hospitality jobs each INCREASED 26,000 in January;
  • Number of retail jobs ROSE 15,4000 – following a drop of 25,600 in December;
  • Number of leisure-hospitality jobs also GREW in January, UP 35,000

Trends

  • Three-month average increase in payroll jobs was 192,000, down from 216,000 in the prior three months;
  • Number of new entrants to the labor force (as unemployed) was 645,000 in January, UP from 581,000 in December;
  • Unemployment rate for Blacks, which had dropped to an all-time low of 6.8 percent in December, jumped to 7.7 percent in January;
  • Unemployment rate for those without a high school diploma FELL to 5.4 percent in January from 6.3 percent in December, sign of a tighter labor market;

Data Source Bureau of Labor Statistics

Image result for employment situation report

The January employment situation report provides cover for the Federal Open Market Committee to raise interest rates which even without Fed action have been creeping up.

The robust labor market was clear in Friday’s report from the Bureau of Labor Statistics showing as it did the fifth month-month gain of more than 200,000 jobs in the 12-month old Trump Administration. To be sure, a sizable of that increase have been in low-paying retail and leisure-hospitality jobs, but still, more jobs are more jobs.

It’s obviously too early to tell if new jobs will result from the new tax law, though it is likely the increase in take-home pay because of revised withholding tables and rates could provide a spending boost by those who don’t put the money aside in anticipation of a surprise in April 2019.

The troubling aspect of the report was the drop in both average weekly hours and consequentially the drop in average weekly earnings. Ideally a growing economy should produce more, not fewer hours of work, with the increase in hours raising the need for new or additional hires.

That the increase in jobs was matched by an increase in multiple job holders suggests families are still struggling to make ends meet.

Hear Mark Lieberman every Friday morning at 6:20 am on The Morning Briefing on POTUS on Sirius-XM 124. and today (Friday February 2) on the Midday Briefing on POTUS.You can follow Mark Lieberman on Twitter at @foxeconomics.

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