For the 11th consecutive month, the Bureau of Labor Statistics
reported on Friday, the economy generated more than 200,000 new jobs. And a closely watched metric, average wages, which had fallen in December, advanced 0.5 percent in January. They are now 2.2 percent higher than last January. When 2014 inflation is calculated, that's a 1.4 percent rise in real wages year to year, the largest one-year increase since the economy began growing again in mid-2009.
On a seasonally adjusted basis, 267,000 new private-sector jobs were created last month, but the public sector lost 10,000 for a total of 257,000. The BLS revised its previously calculated new jobs for November from 353,000 to 423,000 (the highest since March 2000), and in December from 252,000 to 329,000.
The average monthly gain for 12-month period ending in January was 268,000. That's the best 12-month stretch since 1999-2000, when the average was 274,000. In the past three months, however, growth in new jobs has averaged 336,000 a month.
The employment-population ratio rose slightly to 59.3 percent. The labor force participation rate rose to 62.9 percent. The civilian labor force rose by 703,000 in January after a drop of 273,000 in December.
The official "headline" unemployment rate—called U3 in BLS jargon—rose to 5.7 percent. U6—a BLS measure of unemployment and underemployment that includes people with no job at all, part-time workers who want full-time jobs but can't find one, and many "discouraged" workers—rose 0.1 percent to 11.3 percent in January, having fallen 0.2 percent in December.
The bureau points out that "the monthly change in total nonfarm employment from the establishment survey is on the order of plus or minus 90,000." That means the "real" number of new jobs created in January wasn't 257,000, but somewhere in a range between 167,000 and 347,000.
By the BLS's tally, 9 million people were officially out of work in January. This does not include Americans who have left the workforce and still want a job but have despaired of finding one. The large increase in the workforce last month could mean the mindset of many of those who have dropped out of the workforce without actively retiring or going to school is changing. But one month's report isn't enough to confirm that.
“In one line: Employment growth is astonishingly strong; it will have consequences for the Fed,” writes Ian Shepherdson, chief economist at Pantheon Macroeconomics.
“With every indicator we follow screaming that payrolls will be very strong for the foreseeable future, wage pressures will intensify. We expect [Federal Reserve] Chair [Janet] Yellen to signal a change in the Fed’s view at her Monetary Policy Testimony later this month, with 'patient' dropped at the March FOMC, opening the door to a June hike” in interest rates.
For more details about today's jobs report, please continue reading below the fold.
Some key elements in the report:
Hours & Wages
• The average hourly earnings of private-sector production and nonsupervisory employees rose 7 cents to $20.80. In January of 2014, that average was $20.39.
• Average work week for all employees on non-farm payrolls was unchanged at 34.6 hours.
•Average hourly earnings for all employees on private non-farm payrolls rose 12 cents to $24.75.
• The manufacturing workweek rose to 41.0 hours.
• The average workweek for production and nonsupervisory employees on private nonfarm payrolls fell to 33.8 hours.
Among other news in the January job report:
Demographic breakdown of official (U3) seasonally adjusted jobless rate:
• African American: 10.3 percent
• Latino: 6.7 percent
• Asian (not seasonally adjusted): 4.0 percent
• American Indian (data not collected on monthly basis)
• White: 4.9 percent
• Adult women (20 and older): 5.1 percent
• Adult Men (20 and older): 5.3 percent
• Teenagers (16-19): 18.8 percent
Duration of unemployment:
• Less than five weeks: 2.383 million
• 5 to 14 weeks: 2.318 million
• 15 to 26 weeks: 1.38 million
• 27 weeks and more: 2.8 million
Job gains and losses in selected categories:
• Professional services: + 39,000
• Transportation & warehousing : - 8,600
• Leisure & hospitality: + 37,000
• Information: + 6,000
• Health care: + 49,700
• Retail trade: + 45,900
• Construction: + 39,000
• Manufacturing: + 22,000
Here's what the seasonally adjusted job growth numbers have looked like in January for the previous 10 years.
January 2005: + 134,000
January 2006: + 277,000
January 2007: + 238,000
January 2008: + 15,000
January 2009: - 798,000
January 2010: + 18,000
January 2011: + 70,000
January 2012: + 360,000
January 2013: + 197,000
January 2014: + 144,000
January 2015: + 257,000
••• •••
The BLS jobs report is the product of a pair of surveys, one of more than 410,000 business establishments called Current Employment Statistics, and one called the Current Population Survey, which questions 60,000 householders each month. Here is the BLS's explanation of its methodology. The establishment survey determines how many new jobs were added. It is always calculated on a seasonally adjusted basis determined by a frequently tweaked formula. The BLS report only provides a snapshot of what's happening at a single point in time.
It's important to understand that the jobs-created-last-month-numbers that it reports are not "real." Not because of a conspiracy, but because statisticians apply formulas to the raw data, estimate the number of jobs created by the "birth" and "death" of businesses, and use other filters to fine-tune the numbers. And, always good to remember, in the fine print, they tell us, with a 90 percent confidence level, that the actual number of newly created jobs reported each falls within a plus or minus 90,000 range.