US unemployment rate at 8-year low

07/02/2016 07:54 AST

US employment gains slowed more than expected in January as the boost to hiring from unseasonably mild weather faded, but surging wages and an unemployment rate at an eight-year low suggested the labor market recovery remains firm.

Nonfarm payrolls increased by 151,000 jobs last month and the unemployment rate was at 4.9 percent, the lowest since February 2008, the Labor Department said. Data for November and December was revised to show 2,000 fewer jobs created than previously reported.

Economists polled by Reuters had forecast employment increasing by 190,000 and the jobless rate steady at 5 percent. Also taking the sting from the softer payrolls number, 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.

The sharp step-down in job gains from the fourth quarter’s brisk clip largely reflected 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. But coming in the wake of an abrupt slowdown in economic growth in the fourth quarter and a sharp stock market sell-off, the closely watched employment report could add to concerns the US economic outlook was deteriorating.

US Federal Reserve Chairperson 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. Against the backdrop of tightening financial market conditions, the deceleration in employment growth could further undercut the case for a Fed interest rate hike in March. The US central bank raised its short-term interest rate in December for the first time in nearly a decade.

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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. Even with slower job growth, wages rebounded sharply after holding steady in December. Average hourly earnings increased 12 cents or 0.5 percent. That left the year-on-year gain in earnings at 2.5 percent as the unusually strong wage gains seen in January 2014 dropped out of the picture.

But with the jobless rate in a range most economists associate with full employment, wage growth is expected to pick-up this year.

With its January employment report, the government published its annual “benchmark” revisions and updated the formulas it uses to smooth the data for regular seasonal fluctuations.

Arab News