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Employment Situation: Solid Job Gains, Negative Revisions, Wage Growth Slows

February 3, 2017

Bottom Line: Payroll Employment rose by 227k in January, compared with market expectations for an increase of 180k. Trade, transportation and utilities sectors saw strong growth and upward revisions to prior months data in the wake of volatility in that sector to the bankruptcy of a major shipping line.

As usual this time of year, the BLS issued its benchmark revisions. Combines with the regular two month revision of 24K, this took 2016's average monthly job creation from 229k to 187k. And it took 2015 from 251k to 226k. Job creation has averaged 204k over the past 3 months vs. the past 12 months average of 195k.

The unemployment rate rose, as household employment dropped and the labor force increased. Over the past year, the unemployment rate has declined by 0.1 percentage points, the result of 1,548k more people finding jobs as 1,354k more people entered the labor force.

Both hourly and weekly earnings rose only modestly after a stronger increase in December. The workweek was unchanged and the 3-month average is now 34.4.

Payroll Employment rose by 227k in January, compared with market expectations for an increase of 180k. The prior 2 months were revised, higher in December by 1k and higher in November by 23k.

Government jobs ROSE by 53k. Consequently, private sector jobs ROSE by 174k. Private education jobs fell by 9k. State and Local education jobs rose by 28k. Overall employment is now 1.6% ABOVE its year ago level, Over the past 12 months, 2,343k jobs have been created.

In January, the job gains were in Trade, Transportation & Utilities (+44k with 46k of those in Retail Trade), Professional & Business Services (+39k with the addition of 15k in Temp Help Services), Government (+53k), Construction (+36k), Leisure & Hospitality (+34k), Education & Health Services (+32k), Financial Activities (+32k), and Other Services (+16k).

The Unemployment Rate ROSE by 0.1 percentage points in January to 4.8%, compared with market expectations for a no change to 4.7%.

Household employment fell by 30k while the labor force increased by 76k, resulting in an increase in the number of unemployed of 106k. The Labor Force Participation Rate ROSE by 0.2 percentage points to 62.9%.

The Employment-Population Ratio ROSE by 0.2 percentage points to 59.9%.

The number of people Working Part-Time for Economic Reasons ROSE by 293k to 5,769k. while Long-Term Unemployment ROSE by 19k to 1,850k (accounting for 24.2% of the unemployed), while the Mean Duration of Unemployment FELL by 0.9 weeks to 25.1 weeks.

There are now 7.6 million people officially unemployed. In addition, there are another 5,739k people who say they want a job but are not currently looking for one. Finally, another 5,769k people are working part-time because of slack economic conditions.

Hourly Earnings ROSE by 0.1% in January, below market expectations of 0.3%. Hourly earnings are now 1.7% ABOVE their year ago level.

Weekly Earnings also ROSE by 0.2%, the result of the change in hourly earnings and a steady workweek. Weekly earnings are now 1.8% ABOVE their year ago level.

The Average Workweek was UNCHANGED at 34.4 hours, ABOVE the market consensus at 34.3 hours.

Article by Contingent Macro Advisors