Job Growth Continues at Rapid Pace
The Labor Department, affirming the economy’s amazing vigor, reported Friday that U.S. employers kept hiring at a very brisk pace last month and drove joblessness among Latinos and African Americans to the lowest rate on record.
Boosted by a surprisingly robust construction market, the economy in January added 245,000 payroll jobs across a broad spectrum of nonfarm industries. That was almost twice as many new jobs as some economists expected.
The nation’s overall jobless rate remained at 4.3% in January, again matching a 28-year low posted in April. The unemployment rate for Latinos dropped a full percentage point, to 6.6%, and the figure for blacks edged down to 7.8%, almost a full percentage point below November.
While still relatively high, both rates are the lowest since the government began tracking such data in the early 1970s.
They suggest that the strong economy and demand for labor are reaching not only minorities but all of the nation’s hard-core unemployed.
“While this is positive, we need to look at what types of jobs they are in . . . and their upward mobility,” said Sonia Perez, economic specialist at the National Council of La Raza, a Latino research group based in Washington.
Labor officials noted that the share of working-age adults with jobs is at an all-time high at almost 65%. And more retirees, mothers and other dormant workers entered the work force to take advantage of new work and higher pay.
“This is an excellent period for workers,” said Lynn Reaser, a Bank of America economist in Jacksonville, Fla. She cautioned that many companies face the prospect of smaller profits, which could lead to job cuts.
Yet new jobless claims filed by workers have declined lately, as have reports of layoffs, which just a few months ago triggered concern of an economic slowdown or even recession.
Friday’s strong employment news was just the latest in a series of reports in recent days that highlighted the staying power of the nation’s long economic expansion, even as much of the rest of the global economy is in recession or slowing. The job growth followed gains of a revised 298,000 in December.
“The much-anticipated slowdown is not here yet, nor is it around the corner,” said Mark Zandi, chief economist at Regional Financial Associates, a national consulting house in West Chester, Pa., who, like other analysts, has upgraded his forecast for this year.
The surprisingly strong U.S. job report, however, was not cheered by Wall Street, as major stock indexes finished lower Friday. Analysts said investors not only have given up hope of lower interest rates soon, but there also is increasing concern that the Federal Reserve may go in the other direction to head off higher inflation triggered by rising wages from the tight labor market.
Most economists think the Fed will continue to leave the rates unchanged, as its open market committee did earlier this week, in hopes that the economy will slow down on its own. At the moment anyway, signs of inflation still appear faint.
The Labor Department report did indicate that workers’ wages in January rose by 6 cents to $13.04, the largest monthly increase since August. Still, that gain equated to an average annual increase of 4%, about what it has been for the last year.
The January job report, however, showed a decline in the average weekly hours worked. And that could be a sign of slowing growth, said Sung Won Sohn, senior vice president and chief economist at Wells Fargo Bank in Minneapolis.
Like other economists, Sohn still sees a softening of economic activity this year, and he remains concerned about the rising U.S. trade imbalance, consumers’ low savings rate and overvaluation of the stock market. Sohn said he was astonished by January’s job gains and baffled by where employers are finding new workers.
“Given the tight labor market, the economy is producing workers out of the hat,” he said.
Last month’s employment snapshot did show a couple of cloudy patches. One was in manufacturing, where payrolls continued a yearlong decline, particularly at makers of industrial machinery, electronics and apparel and textiles. But the loss of 13,000 factory jobs in January was smaller than in previous months, and other signs suggest that factory orders are picking up.
Payrolls also fell in the mining and oil industries, reflecting the low commodity prices and global turmoil that are affecting big energy-producing states, such as Louisiana, Texas and Oklahoma.
But otherwise, employment gains last month were impressively broad-based by region and industry. “There really isn’t any sign of weakness,” said Robert A. Brusca, chief economist at Nikko Securities in New York, who is still betting that the economy will slow sharply this first quarter.
Brusca said he was particularly struck by the resilient performance in the construction industry. He attributed that largely to the Fed’s three successive interest rate cuts last year, and, as such, he views it as a temporary boost to employment that will soon fizzle.
The service industry continues to burgeon, accounting for nearly half of the nation’s 245,000 new jobs. That was led by business services, where employment surged by 48,000, much of it in computer data processing. An additional 27,000 jobs were added in engineering and management services.
Nationwide, retail trade employment increased by a robust 30,000, reflecting strong retail sales.
California workers likely benefited roundly from the hiring in engineering and computer services, as the state has a disproportionately higher share of workers in those industries. California’s job and unemployment data comes out Friday.
