When it comes to this month’s Employment Situation Summary, there’s good news and bad news.
The good news is that employers added 227,000 jobs to public and private payrolls, far more than the 175,000 jobs predicted by economists. The bad news is that wage growth slowed slightly last month. Average hourly earnings by employees on private payrolls increased by 3 cents an hour to $26, after a 6-cent-an-hour increase in December.
“We haven’t really seen that significant acceleration in wage growth that we would anticipate given how close we are to full employment,” Ryan Sweet, an economist at Moody’s Analytics, told Bloomberg prior to the report’s release. “I think that’s coming, it’s just going to take a little bit more time.”
The PayScale Index, which measures the change in wages for employed U.S. workers, forecasts 3.2 percent year-over-year growth for Q1 2017.
Where the Jobs Are
The following industries added jobs last month:
- Retail trade (+46,000 jobs)
- Construction (+36,000 jobs)
- Financial activities (+32,000 jobs)
- Food services and drinking places (+30,000 jobs)
- Professional and technical services (+23,000 jobs)
- Healthcare (+18,000 jobs)
Other industries were flat for the month, including manufacturing, wholesale trade, mining, government, and information.
Unemployment and Labor Force Participation
The unemployment rate increased slightly in January, as did the labor force participation rate, which was 62.9 percent (versus 62.7 percent the previous month).
The labor force participation rate has declined sharply since the recession after remaining fairly stable for the previous nine years. Economists have proposed several reasons for the drop, including structural factors like Baby Boomers reaching retiring age and cyclical factors in the wake of the Great Recession. It’s these cyclical factors that are of greatest concern: if workers who lost their job during the recession are so discouraged that they drop out of the labor force entirely, that obviously has a big impact on the economy.
However, as Andy Kiersz writes at Business Insider: “In recent months, the labor-force participation rate has mostly held steady, possibly indicating a tightening labor market as people who were previously discouraged from looking for work move back into the labor market.”
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