OVERVIEW
- The unemployment rate remained at 4.1 percent for the fourth consecutive month in December while payrolls expanded by 200,000, according to the Bureau of Labor Statistics.
- The Labor Force Participation (LFP) remained at also remained at 62.7 percent for the fourth straight month. The employment-population ratio was unchanged at 60.1 percent for the third straight month.
- Construction added 36,000 jobs in January.
- Employment in food services and drinking places added 31,000 jobs while employment in health care added 21,000 with 13,000 of those jobs in hospitals.
- The manufacturing sector added 15,000 jobs continuing a trend. In the past 12 months, the sector has added 186,000 jobs.
- Employment in the other major sectors— mining, wholesale trade, retail trade, transportation and warehousing, information, financial activities, professional services and government —changed little over the month.
- The November 2017 number was revised downward from 252, 000 to 216,000 and the December 2017 payrolls number was revised up from 148,000 to 160,000.
ANALYSIS
After a disappointing December print, the labor market picked up in January. After revisions to earlier reports, job gains averaged 192,000 months for the past three months. A survey of Wall Street Journal economists expected an increase of 177,000 jobs. According to an ADP report earlier this week, private sector employment increased by 234,000 jobs in January. Also, this past week saw a Labor Department report showing that initial claims for state unemployment benefits slipped 1,000 to a seasonally adjusted 230,000 for the last week of the month. According to Reuters this represents the 152nd week of claims settling below the 300,000 threshold associated with a strong economy. Wage growth underscores the tight labor markets. This wage growth is the fastest since the Great Recession. However, the labor force participation rate remains low by historical standards; the rate only declined by one-tenth of a percentage point since last January. In addition, the broader measure which includes discouraged workers, the U-6 rate increased to 8.2 percent. The decline in African-American workers proved to be a bump. After falling to 6.8 percent in December, the rate for black workers rose to 7.7 percent last month. Despite the recent wage increases overall, the lower-wage food services and drinking places sector grew faster than higher wages sectors such as professional and technical services over the past 10 years. (See chart below.)
