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Wall Street to Your Street


Job Growth Picks up in January

After several subpar months of job growth, U.S. employers added 227,000 nonfarm payroll jobs in January, according to the U.S. Department of Labor, Bureau of Labor Statistics Employment Situation report issued Feb. 3 (Exhibit 1). That marked the 76th consecutive month of job growth.

The unemployment rate edged up slightly for the month, from 4.7% to 4.8% as more people entered the workforce in search of employment (Exhibit 2).

      1The 227,000 new jobs exceeded the 2016 monthly average of about 180,000 jobs, and nearly equaled the 2015 average of 229,000 jobs.

We believe the recent trend of declining job growth is the natural result of the drop in the unemployment rate over the past few years.

At 4.8%, the current unemployment rate is right at the rate the Federal Reserve Board has said it considers full employment.

      2The average hourly earnings for all employees on private nonfarm payrolls moved up by $0.03 to $26 after rising $0.06 in December (Exhibit 3). It has risen 2.5% over the last year.

Here are some of the other key trends highlighted in the report:

  • The number of unemployed persons looking for jobs edged up slightly from 7.5 million to 7.6 million for the month.
  • exhibit
      3The civilian labor force increased by 584,000 in January, and the labor force participation rate rose by 0.2% to 62.9%. Total employment, as measured by the household survey, was up by 457,000 over the month, and the employment-population ratio edged up to 59.9%.
  • The number of long-term unemployed (those jobless for 27 weeks or more) was nearly unchanged, moving from 1.8 million to 1.9 million in January, but remains at an elevated level (Exhibit 4). That accounts for 24.4% of the unemployed, which was up slightly from 24.2% the previous month.
  • exhibit
      4The labor force participation rate for those in their prime working years (age 25 to 54) remained unchanged at 81.5%, which is about 1.5% below the pre-recession level (Exhibit 5).
  • The average workweek was unchanged at 34.4 hours, which is in a range comparable to that preceding the last recession (Exhibit 6).
  • The number of persons employed part-time for economic reasons (also referred to as involuntary part-time workers) remains high, and moved up slightly from 5.6 million to 5.8 million in January (Exhibit 7).exhibit 5
  • Initial jobless claims, reported weekly, remained at a very low level (Exhibit 8).

Strong job growth had been a contributing factor in the Federal Reserve Board's decision to raise rates in December, although they declined to raise rates again in January.

exhibit 6, 7, 8However, we believe that if employment figures remain strong, that will encourage further rate hikes during 2017.

We believe that a series of small rate hikes during the year would be beneficial to net savers without materially affecting the economy or consumer spending.

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