The first measurement in 2016 of the U.S. labor market was tepid, but the soft numbers overshadowed several otherwise positive signs for workers and the economy.
January disappointed with employers last month adding just 151,000 jobs, the Labor Department said Friday. That weak number, however, was partially offset by a drop in the unemployment rate to an eight-year low of 4.9 percent.
Bad weather may have weighed against hiring last month too.
The “numbers are about momentum, so while 151,000 new jobs in January is below expectations and off pace from prior months, the data shows America’s recovery is continuing,” said Beth Ann Bovino, U.S. chief economist for
Standard & Poor’s Ratings Services. Last year’s numbers rivaled the booming 1990s.
The weak hiring number aside, average hourly earnings rose and hiring rose in the troubled manufacturing sector after several weak months.
Here are three important takeaways from the first jobs report of the year.
Recession fears ebb
Friday’s jobs report was closely watched because of murmuring that the U.S. economic expansion, which began in the summer of 2009, might be approaching a recession. That worry lingered, in part, because the U.S. growth rate for the final three months of 2015 had slowed to an anemic 0.7 percent.
Employment in the final quarter of 2015 was up 2.4 percent, according to the White House. It would be highly unusual for hiring to remain robust while the economy enters recession, defined as two successive quarters of negative growth.
Measures of underemployment and workforce participation continue to show improvement, and would show signs of stress if recession neared.
Workers see gains
If the early 2000 years reflected a jobless recovery, the current expansion has been marked by relatively flat wages. It’s why many ordinary folks say they don’t feel the recovery. That’s beginning to change, and January highlighted the trend.
Average hourly earnings rose by 0.5 percent in January, 2.5 percent over the past 12 months. Over the past six months wages have grown at a rate of 2.9 percent, according to the White House Council of Economic Advisers.
“Any remaining slack in the labor market is quickly being absorbed, and the job market is tightening. Wage growth is picking up in response,” said Mark Zandi, chief economist for Moody’s Analytics. “This is all good news for the economy, and suggests that the economic expansion will remain on track despite what is happening in financial markets or overseas.”
Key sectors see strong hiring
The U.S. dollar’s strengthening against foreign currencies and the global economic slowdown weighed on U.S. exports and the manufacturing sector in recent months. January marked relief with manufacturers adding a solid 29,000 jobs.
“The stronger-than-expected gains in manufacturing employment provide a hint of optimism for a sector that has been hard-hit by global headwinds over the course of the past year, and the reduction in the unemployment rate suggests that the labor market continues to move in the right direction,” said Chad Moutray, chief economist for the National Association of Manufacturers.
Shrugging off a flat December, retailers enjoyed a boom in January, adding almost 58,000 jobs.
“The gains in retail jobs in January indicate consumers continued to shop even after the holiday season came to a close,” said Jack Kleinhenz, chief economist for the National Retail Federation. “Clothing and department stores scored well for job gains, with home-related retail sectors such as furniture and electronics also showing solid gains.”
One potential warning sign, however, is that the transportation and warehousing sector shed more than 20,000 jobs last month, a sign of softness in the goods-moving sector. And temporary help services, often a harbinger of future hiring, shrunk by more than 25,000 posts. The government sector shed 7,000 jobs in January.
JANUARY BY THE NUMBERS
Professional and business services, up 9,000
Manufacturing, up 29,000
Leisure and hospitality, up 44,000
Health care, up 36,800
Construction, up 18,000
Temporary help services, down 25,200
Transportation and warehousing, down 20,300
Retail, up 57,700
Financial services, up 18,000
Government jobs, down 7,000