There was a lot of important information on the U.S. economy released this week, but the biggest data point is without a doubt the latest monthly job report from the Bureau of Labor Statistics (BLS) out this morning. Indeed, total nonfarm employment in America rose by 200K payrolls in January, much better that the 175K gain economists expected and the 88th consecutive month of job growth. There was also a net downward revision of 24K payrolls to the November and December figures, but job growth still averaged 192K during the past three months. That is comfortably above Federal Reserve (Fed) officials’ estimates for what is needed to keep up with U.S. population growth.
As for joblessness in America, the official unemployment rate (U-3) held at 4.1 percent in January, while the underemployment rate (U-6) edged higher to 8.2 percent, both still near the best levels of the current business cycle. Elsewhere, the labor force participation rate, which remains under pressure from the growing number of Baby Boomers retiring (exiting the workforce), was unchanged at 62.7 percent last month. With respect to wage growth, average hourly earnings rose by 0.3 percent in January, in line with expectations and the December gain was revised higher. On a year-over-year basis, hourly wages rose by 2.9 percent in January, the fastest pace of annual growth since 2009. Some of the recent acceleration in wage growth could be related to the 18 states that raised their minimum wages last month, as well as the numerous companies that announced bonuses and salary increases following the passage of the tax package in Congress. The tightening U.S. labor market, though, could help this trend continue for much longer.
Sources: U.S. DoL, Twitter, Bloomberg, FRBSLPost author: Charles Couch