The American economy added 257,000 jobs in January, a modest deceleration from the white-hot pace of gains in late 2014, but healthy enough to assuage fears of a slowdown.þþThe Labor Department said on Friday that the unemployment rate ticked up to 5.7 percent, from 5.6 percent. The portion of Americans in the work force rose slightly last month, a positive sign even though the unemployment rate rose.þþOver the course of 2014, the economy added just under 250,000 jobs a month on average. But employers grew bolder in the final quarter of the year, creating an average of more than 290,000 jobs a month in October, November and December. Hiring in sectors like leisure and hospitality, retail, and professional and business services was especially robust.þþIn addition, the Labor Department on Friday revised the December gain to 329,000 jobs, from its initial estimate of 252,000.þþSince the beginning of this year, some other economic indicators have been lackluster, including data last week that showed economic output grew at a slower-than-expected 2.6 percent rate in the fourth quarter of 2014.þþOn Thursday, new data revealed a big jump in the country’s trade deficit in December, as imports surged and exports fell. With the dollar's gaining strength and the euro and other currencies’ weakening, the trade balance may continue to weigh on the economy in 2015.þþEconomists had been looking for a gain of 230,000 jobs last month, but statistical quirks and the end of the holiday retail season have traditionally made January a difficult month for experts to get right ahead of time.þþGovernment statisticians try to adjust for the annual exit of workers from stores after the end of the holiday shopping season, but this factor is always a wild card. Similarly, snowy weather in some parts of the country can also throw the numbers.þþIn January 2014, for example, a combination of these factors produced an initial estimate of just 113,000 additional jobs, well below what economists had been predicting. Although that was later revised to 144,000, January was still the worst month for job creation last year.þþ“Be wary of January payrolls data,” said Jim O’Sullivan, chief United States economist at High Frequency Economics, in a note to clients before the release on Friday morning. “While the data are noisy in general, limiting the information value of a single reading, the seasonal adjustment process is especially challenging in January.”þþAnother quirk last month was the annual adjustment of population figures used to calculate the unemployment rate in the household survey, a separate poll from the data gathered from establishments that produces the monthly change in payrolls.þþIn general, the household survey tends to be more volatile than the establishment survey, but this is exacerbated as benchmarks are adjusted at year-end.þþAlong with job creation and the unemployment rate, traders on Wall Street and policy makers are also closely watching for any sign that long-stagnant average hourly earnings are finally beginning to rise at a healthy pace.þþLast month, hourly earnings rose 0.5 percent, above the consensus forecast of 0.3 percent, compared with a December drop that caught economists by surprise.þþAlthough the unemployment rate has been steadily falling since peaking at 10 percent in October 2009, wage gains have been paltry. However, January's increase represents the fastest monthly gain in months.þþEven in months when wages did rise more sharply, hopes of sustained gains have been dashed by weakness the next month, a pattern repeated in November and December, when a 0.2 percent jump was immediately followed by a 0.2 percent dip.þþThe Federal Reserve, in particular, has been trying to gauge whether workers’ paychecks are rising and whether the labor market slack built up since the recession is finally receding.þþThe central bank has indicated that it will begin the long-anticipated process of raising short-term interest rates from near zero later this year, but persistently low inflation and little evidence of building wage pressures could delay that.þþUntil recently, many economists had been expecting policy makers to lift rates at their June meeting, but several experts have recently pushed the target date to September.
Source: NY Times
