WASHINGTON – U.S. employment gains slowed more than expected in January because the boost to hiring from unseasonably mild weather faded, but surging wages and an unemployment rate in an eight-year low suggested the labour market recovery remains firm.
Nonfarm payrolls increased by 151,000 jobs last month and the unemployment rate was at 4.9 per cent, the cheapest since February 2008, the Labor Department said on Friday.
Data for November and December was revised to show 2,000 fewer jobs created than previously reported. Economists polled by Reuters had forecast employment increasing by 190,000 and the jobless rate steady at 5 per cent.
Also using the sting in the softer payrolls number, employers increased hours for workers. Manufacturing, that has been undermined by a strong dollar and weak global demand, added the most jobs since August 2013.
The sharp step-down in job gains in the fourth quarter’s brisk clip largely reflected payback after the warmest temperatures in a long time bolstered hiring in weather-sensitive sectors like construction. January employment also lost the lift in the hiring of couriers and messengers, that was buoyed in November and December by strong online holiday sales.
But coming in the wake of the abrupt slowdown in economic development in the fourth quarter along with a sharp stock market sell-off, the closely watched employment report could increase concerns the U.S. economic outlook was deteriorating.
Federal Reserve Chair Janet Yellen has said the economy needs to create just under 100,000 jobs a month to keep up with development in the significant age population.
Against the backdrop of tightening financial market conditions, the deceleration in employment growth could further undercut the situation for a Fed interest rate hike in March. The U.S. central bank raised its short-term rate of interest in December for the first time in nearly a decade.
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FULL EMPLOYMENT
The economy grew at a 0.7 per cent annual rate within the fourth quarter, restrained by headwinds that included the strong dollar and efforts by businesses to market off inventory.
Even with slower job growth, wages rebounded sharply after holding steady in December. Average hourly earnings increased 12 cents or 0.5 per cent. That left the year-on-year gain in earnings at 2.5 per cent because the unusually strong wage gains observed in January 2014 dropped from the picture.
But using the jobless rate inside a range most economists keep company with full employment, wage growth is expected to pick up this year.
With its January employment report, the government published its annual “benchmark” revisions and updated the formulas it uses to smooth the data for normal seasonal fluctuations. It also incorporated new population estimates.
The government said the amount of employment in March of this past year was 206,000 lower on a seasonally adjusted basis of computer had reported. The transfer of population controls means figures on the labour force or number of employed or unemployed in January are not directly comparable to December.
The labour force participation rate, or the share of working-age Americans who’re employed or at best searching for a job was at 62.7 percent, near four-decade lows.
Low participation could crimp job growth because the way to obtain labour shrinks, unless a substantial rise in wages lures more and more people back into the labour force.
In January, all of the employment gains were within the private sector, which added 158,000 jobs. The services sector dominated the payrolls increase last month, with 118,000 jobs created.
Mining losing lost 7,000 more jobs, while the embattled manufacturing sector surprisingly added 29,000 positions.
Mining payrolls have decreased by 146,000 since peaking in September 2014. About three-fourths from the job losses over this era will be in support activities for mining.
Further losses are most likely after a set of Thursday showed energy firms in January announced plans to lay off 20,246 workers. Oil prices have plunged about 70 percent in the last 1 . 5 years, forcing firms like oilfield services provider Schlumberger to slash their workforces.
Construction payrolls rose 18,000, cool down after hefty gains in the fourth quarter. Courier services hiring fell 14,400. Retail employment added a powerful 57,700 jobs after shedding 800 positions in December. But hiring could slow within the months ahead following a quantity of retailers, including Walmart and Macy’s announced a large number of store closures.
Temporary hiring fell 25,200 recently and government payrolls fell 7,000.
? Thomson Reuters 2016
