U.S. job growth slows, unemployment rate at 8-year low

Posted by: privatefinancetips in BLOG, Financial Advisor Mar 27, 2016

WASHINGTON – U.S. employment gains slowed more than expected in January because the boost to hiring from unseasonably mild weather faded, but surging wages as well as an unemployment rate at an eight-year low suggested the labour market recovery remains firm.

Nonfarm payrolls increased by 151,000 jobs last month and the unemployment rate what food was in 4.9 per cent, the cheapest since February 2008, the Labor Department said on Friday.

Data for November and December was revised to exhibit 2,000 fewer jobs created than previously reported. Economists polled by Reuters had forecast employment increasing by 190,000 and also the jobless rate steady at 5 per cent.

Also taking the sting in the softer payrolls number, employers increased hours for workers. Manufacturing, which has been undermined with a strong dollar and weak global demand, added the most jobs since August 2013.

The sharp step-down in job gains from the fourth quarter’s brisk clip largely reflected payback following the warmest temperatures in years bolstered hiring in weather-sensitive sectors like construction. January employment also lost the lift from the hiring of couriers and messengers, which was buoyed in November and December by strong online holiday sales.

But arriving the wake of the abrupt slowdown in economic development in your 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 below 100,000 jobs per month to maintain growth in the working age population.

Against the backdrop of tightening financial market conditions, the deceleration in employment growth could further undercut the case for any Fed interest rate hike in March. The U.S. central bank raised its short-term interest rate in December the very first time in nearly a decade.

FULL EMPLOYMENT

The economy grew at a 0.7 percent annual rate within the fourth quarter, restrained by headwinds that included the strong dollar and efforts by businesses to sell off inventory.

Even with slower job growth, wages rebounded sharply after holding steady in December. Average hourly earnings increased 12 cents or 0.5 percent. That left the year-on-year grow in earnings at 2.5 per cent because the unusually strong wage gains observed in January 2014 dropped from the picture.

But with the jobless rate in a range most economists associate with full employment, wage growth is expected to pick up this season.

With its January employment report, the federal government published its annual “benchmark” revisions and updated the formulas it uses to smooth the information for normal seasonal fluctuations. Additionally, it incorporated new population estimates.

The government said the level of employment in March of last year was 206,000 lower on the seasonally adjusted basis than it had reported. The shift in 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 even the share of working-age Americans who are employed or at best looking for a job what food was in 62.7 percent, near four-decade lows.

Low participation could crimp job growth as the way to obtain labour shrinks, unless a significant rise in wages lures 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 help 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 of the job losses over this era will be in support activities for mining.

Further losses are most likely following a report on Thursday showed energy firms in January announced intends to lay off 20,246 workers. Oil prices have plunged about 70 percent within 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 strong 57,700 jobs after shedding 800 positions in December. But hiring could slow within the months ahead following a number of retailers, including Walmart and Macy’s announced dozens of store closures.

Temporary hiring fell 25,200 last month and government payrolls fell 7,000.

? Thomson Reuters 2016