WASHINGTON U.S. employment gains slowed more than expected in January as the boost to hiring from unseasonably mild weather faded, but rising wages and an unemployment rate at an eight-year low suggested the labor market recovery remains firm.
Non-farm payrolls increased by 151,000 jobs and the unemployment rate slipped one-tenth of a percentage point to 4.9 percent, the lowest since February 2008, the Labor Department said on Friday. The payrolls gain was a sharp step-down from the average 231,000 jobs per month during the fourth quarter.
"The fact that payroll gains fell back to earth is not necessarily a bad sign. Most indications are that the job market in the U.S. is on solid footing and improving," said Nariman Behravesh, chief economist at IHS in Lexington, Massachusetts.
Economists had forecast employment increasing by 190,000 in January and the jobless rate steady at 5 percent. The economy added 2,000 fewer jobs in November and December than previously reported.
On top of a 0.5 percent jump in average hourly earnings, which was the biggest gain in a year, employers increased hours for workers. Manufacturing, which has been undermined by a strong dollar and weak global demand, added the most jobs since August 2013.
Economists said the combination of strong wage growth and falling unemployment suggested a March interest rate increase from the Federal Reserve could not be completely ruled out.
The dollar rose against a basket of six major currencies on the data after hitting a roughly 15-week low on Thursday. Prices for U.S. government debt initially fell, but pared losses as stocks on Wall Street extended their decline.
"The lower unemployment rate and rising wages further support the view that the labor market is doing nothing but tightening," said Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania. "Clearly, there are more uncertainties today than when the Fed raised rates in December and hinted that there could be four increases this year. But the labor market is absolutely not one of them."
Tightening financial market conditions and signs that both the domestic and global economies were slowing had undercut the case for a Fed rate hike next month and lowered the probability of monetary policy tightening this year.
The U.S. central bank raised its short-term interest rate in December for the first time in nearly a decade.
Federal Reserve Chair Janet Yellen has said the economy needs to create just under 100,000 jobs a month to keep up with growth in the working-age population.
The economy, especially voters' perceptions of their job prospects, will likely be an issue in the November elections. President Barack Obama lauded the labor market progress.
"This progress is finally starting to translate into bigger paychecks. The United States of America right now has the strongest, most durable economy in the world," Obama told reporters at the White House.
Republican National Committee chairman Reince Priebus, however, said the economy was "still failing the millions of Americans who have given up looking for work."
January's softer job gains were payback after 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.
The economy grew at a 0.7 percent annual rate in the fourth quarter, restrained by headwinds that included the strong dollar and efforts by businesses to sell off inventory.
A separate report from the Commerce Department showed the buoyant dollar cutting into exports in December, causing the trade deficit to widen 2.7 percent to $43.4 billion.
In January, the unemployment rate fell even as more people entered the labor force. The labor force participation rate, or the share of working-age Americans who are employed or at least looking for a job rose one-tenth of a percentage point to 62.7 percent. It remains near four-decade lows.
Low participation could crimp job growth as the supply of labor shrinks, unless a strong rise in wages lures more people back into the labor force. The private sector accounted for all employment gains in January, adding 158,000 positions.
The services sector created 118,000 jobs, the fewest in 10 months. That was because temporary help services fell 25,200 and courier and messenger employment declined by 14,400 jobs. Hiring in these categories normally rises during the holiday season.
Educational services lost 38,500 jobs, but retail payrolls added a strong 57,700 positions. Hiring could slow in the months ahead after a number of retailers, including Walmart (WMT.N) and Macy's (M.N) announced dozens of store closures.
The embattled manufacturing sector surprisingly added 29,000 jobs last month, while mining laid off 7,000 more workers. Mining payrolls have decreased by 146,000 since peaking in September 2014. About three-fourths of the job losses over this period have been in support activities for mining.
Further losses are likely after a report on Thursday showed energy firms in January announced plans to lay off 20,246 workers. Oil prices have plunged about 70 percent in the last 18 months, forcing firms like oilfield services provider Schlumberger (SLB.N) to slash their workforces.
Construction payrolls rose 18,000, cooling off after adding 146,000 jobs in the fourth quarter. Government employment fell 7,000.
(Reporting by Lucia Mutikani; Editing by Andrea Ricci)
This story has not been edited by Firstpost staff and is generated by auto-feed.
Published Date: Feb 06, 2016 06:15 am | Updated Date: Feb 06, 2016 06:15 am