U.S. January jobless rate drops to 4.9%, more than 150,000 workers added to payrolls

The nation’s job market continued to be a bright spot in the broader economy as more than 150,000 workers were added to the U.S. labor pool in January, according to data released Friday (Feb. 5) by the Labor Department’s Bureau of Labor Statistics.

Overall, total nonfarm payroll employment rose by 151,000 in January, and the unemployment rate dropped to 4.9% compared to 5% in December and 5.7% in January 2015. Job gains occurred in several industries, led by retail trade, food services and drinking places, health care, and manufacturing. Employment declined in private educational services, transportation and warehousing, and mining.

The U.S. jobless data follows last week’s snapshot of the Arkansas’ labor market when the state’s unemployment rate fell below to 5% for the first time since June 2001, pushing the Natural State’s labor pool to 1,337,500 in December, state Department of Workforce officials said.

The improving job picture supports comments made by Federal Reserve Chair Janet Yellen on Jan. 27 after the Federal Open Market Committee emerged from the first monetary policy meeting in 2016, touting improvements in the job market although overall economic growth slowed at the end of 2015.

“A range of recent labor market indicators, including strong job gains, points to some additional decline in underutilization of labor resources,” Yellen noted. “Given the economic outlook, the Committee decided to maintain the target range for the federal funds rate at 0.25% to 0.50%. The stance of monetary policy remains accommodative, thereby supporting further improvement in labor market conditions and a return to 2% inflation.”

RETAIL SECTOR LEADS JOB GROWTH
Nationwide, the retail trade added 58,000 jobs in January, following essentially no change in December with strong job additions in general merchandise stores (+15,000), electronics and appliance stores (+9,000), motor vehicle and parts dealers (+8,000), and furniture and home furnishing stores (+7,000).

Employment in retail trade has increased by 301,000 over the past 12 months, with motor vehicle and parts dealers and general merchandise stores accounting for nearly half of the gain.

Job growth in food services and drinking places rose in January (+47,000). Over the year, the industry has added 384,000 jobs. Health care continued to add jobs in January (+37,000), with most of the increase occurring in hospitals (+24,000). Health care has added 470,000 jobs over the past 12 months, with about two-fifths of the growth occurring in hospitals.

Surprisingly, manufacturing added 29,000 jobs in January, following little employment change in 2015. Over the month, job gains occurred in food manufacturing (+11,000), fabricated metal products (+7,000), and furniture and related products (+3,000).

Employment in financial activities rose in January (+18,000). Job gains occurred in credit intermediation and related activities (+7,000).

On the negative side, private educational services lost 39,000 jobs in January due to larger than normal seasonal layoffs. Also, employment in transportation and warehousing decreased by 20,000 in January. Most of the loss occurred among couriers and messengers (-14,000), reflecting larger than usual layoffs following strong seasonal hiring in the prior 2 months.

Employment in mining, which comprises the oil and gas sector, continued on a downward path in January (-7,000). Since reaching a peak in September 2014, employment in the industry has fallen by 146,000, or 17%.

Employment in professional and business services changed little in January (+9,000), after increasing by 60,000 in December.  Job growth in other major industries, including construction, wholesale trade, and government, changed little over the month.

The average workweek for all employees on private nonfarm payrolls rose by 0.1 hour to 34.6 hours in January. The manufacturing workweek edged up by 0.1 hour to 40.7 hours, and factory overtime was unchanged at 3.3 hours.

In January, average hourly earnings for all employees on private nonfarm payrolls increased by 12 cents to $25.39. Over the year, average hourly earnings have risen by 2.5%.