The US economy added 200,000 jobs last month, according to the Bureau of Labor Statistics, topping economists’ expectations for a gain of about 180,000. The January figure puts America closer to maximum employment.
The unemployment rate, calculated based on a separate survey of households, held steady, at 4.1 per cent, for the fourth consecutive month, in line with expectations. The jobless rate remains at the lowest level since the final months of Bill Clinton’s presidency in 2000. The unemployment rate among African Americans went to 7.7 percent, up from 6.8 percent in December.
Revisions in the November and December figures produced a net loss of 24,000 jobs. The change in total nonfarm payroll employment for November was revised down from 252,000 jobs added to 216,000. The change for December was revised up from 148,000 jobs added to 160,000. Job creation has averaged 192,000 over the past three months. For all of 2017, 2.17 million jobs were created in Donald Trump’s first year as president, revised from a previous estimate of 2.06 million.
People working part-time for economic reasons rose by 74,000 to 4.99 million. The U-6, or underemployment rate – a measure that includes part-time workers who’d prefer a full-time position and people who want a job but aren’t actively looking – rose to 8.2 percent from 8.1 percent in the previous month. The U-6 had been at 8.0 per cent in October and November, the lowest post-recession levels.
The labour-force participation rate – the share of adults either working or actively looking for work – was unchanged, at 62.7 per cent. The rate is hovering near the lowest level since the 1970s.
Average hourly earnings rose 0.3 per cent month-on-month and a healthy 2.9 per cent year-on-year, above economists’ projections of 2.6 per cent. The data signal that a more robust labour market is finally beginning to filter through into higher pay for workers.
January’s year-on-year wage growth was the quickest since the recession, but still below pre-recession rates of more than 3 per cent. The $1.5tn tax cut, recently passed by Congress, is expected to lift wages as many companies have cited tax savings when they announced salary increases and bonuses for workers.
Accelerating wage growth could increase inflation. That, in turn, would put pressure on the Federal Reserve to speed up the pace of rate increases.
Fed policymakers left interest rate unchanged this week and said that inflation would move up this year. The US central bank is currently planning three hikes for this year, including one that investors expect in March. In the Fed funds futures market, traders now price in a nearly 30 per cent chance of at least four rate increases in 2018.
The average work week shrank in January to 34.3 hours from 34.5 hours in December.
The construction industry added 36,000 jobs. Professional and business services added 23,000 jobs. Retailers hired 15,400 people. Manufacturing jobs grew by 15,000.
photo: Metropolitan Transportation Authority of the State of New York CC BY 2.0
