The American economy’s jobs machine cooled in January, but still performed well enough to push unemployment to an eight-year low and deliver some much-needed wage gains for ordinary workers.þþThe Labor Department said Friday that payrolls rose by 151,000 in January, a falloff from the year-end sprint that helped make 2015 the second-best year for job creation since the late 1990s. The slowdown makes it more likely that the Federal Reserve will not raise rates again when it meets next month.þþ“I don’t think 151,000 jobs added last month takes a Fed rate hike off the table this year, but it probably does push the next one off until June at the earliest,” said Scott Anderson, chief economist at Bank of the West in San Francisco.þþGiven the outsize gains late last year, as well as much colder weather last month after the warmest December on record, some payback in January was to be expected.þþEconomic Trends: If There Is a Recession in 2016, This Is How It Will HappenFEB. 4, 2016þA January Pause, but Fed Affirms Plan for Gradual Rate IncreasesJAN. 27, 2016þRobust Hiring in December Caps Solid Year for U.S. JobsJAN. 8, 2016þ“The headline number was a bit of a disappointment but not too bad, and the rest of the report suggests steady improvement,” said Michael Hanson, a senior economist at Bank of America Merrill Lynch. “The financial markets are leery, but the labor market still looks like it’s continuing to grow.”þþIndeed, investors have lately been edgy, concerned about weakness in China, plunging oil prices and a series of reports suggesting the American economy may have hit an air pocket in recent weeks.þþThe latest figures on the job market — plus a slight fall in the unemployment rate to 4.9 percent, from 5 percent in December — suggest that some modest strength persists. January was the first time since February 2008 that the unemployment rate fell below 5 percent, just before the collapse of Bear Stearns set the stage for the financial crisis.þþTo be sure, markets are famously mercurial, foreseeing recessions that never come to pass and assuming the good times will go on right up until the music stops.þþ“We don’t think the economy is sliding into a recession,” said Michael Gapen, chief United States economist at Barclays. “We do think the unemployment rate will continue to drift lower and that will support wage growth.”þþLast month, average hourly earnings rose by 0.5 percent, leaving wages up 2.5 percent over the last 12 months. That was the best showing since January 2015 and suggested some of the benefits from the falling unemployment rate were beginning to flow to ordinary workers.þþ“That gain in average hourly earnings is significant,” said Diane Swonk, an independent economist in Chicago. “That’s not strong enough, but it’s a move in the right direction and that’s reassuring.”þþFor all the concerns about growth in 2016, the Main Street economy appears to be on a fairly solid footing.þþSince the beginning of 2010, the American economy has gained nearly 14 million jobs, with healthy increases more recently in better-paying sectors like professional and business services as well as construction. Even as employers had been hiring at a healthy pace, they were only sparingly handing out substantial raises.þþAll of these crosscurrents — steady hiring but anxious markets, falling unemployment but flat wages — underscore the delicate task now facing the Fed.þþThe central bank raised short-term interest rates in December, confident that the economy could withstand the impact of a quarter-point tightening in monetary policy after almost a decade of near-zero rates.þþBut the sell-off in global stock markets, as well as disappointing retail sales and a gloomier trade balance, have prompted some experts to conclude that the Fed will not move again until summer at the earliest.þþMs. Swonk said the report for January has ammunition for Fed officials who favor a rate-tightening sooner rather than later, as well as those who are more dovish. The jump in average hourly earnings last month might be evidence that wage pressures are building, ultimately triggering more inflation, while the slowdown in payroll growth is an indicator that the economy is nowhere near overheating.þþThe overall picture in Friday’s report obscures spots of real strength, along with some real pain.þþSectors tied to the domestic economy, like retail, education and health care, restaurants and professional services, are performing well. Businesses linked closely to export markets or the energy industry, on the other hand, are suffering.þþFor the winners, especially in parts of the country where unemployment is very low, Wall Street’s nervousness seems misplaced.þþ“It’s a very tight labor market, and we continue to hire,” said Dave Rozenboom, president of First Premier Bank in Sioux Falls, S.D. “The economy is as strong as it has ever been here.”þþWith a state unemployment rate of 2.9 percent in late 2015, employers are feeling pressure to increase wages to attract and retain workers, he said.þþStarting salaries for workers who handle credit card customer service and collections recently went to $13 an hour from $11.75, Mr. Rozenboom said. Hospitals and construction firms in the region are also hiring.þþSioux Falls’s situation may be unusually strong, but the upward trajectory in employment over all in the United States suggests to some analysts that smaller-business owners know something that the Wall Street pessimists don’t.þþ“We think the recession talk is overdone and that labor markets are the primary signal that suggests the economy is healthier than people think,” Mr. Gapen of Barclays said. “There is weakness in places tied to energy and in the industrial Midwest, but it’s not widespread and doesn’t suggest there is a more systemic problem.”þþ
Source: NY Times
