- “Amid all the global economic turmoil and domestic market gyrations, positive job growth, the drop in the unemployment rate to 4.9%, and the uptick in wages show the U.S. is heading in the right direction,” said Beth Ann Bovino of Standard & Poor’s Ratings Services.
- MATTHEW BROWN/ASSOCIATED PRESS
The U.S. labor market slowed in January, with nonfarm payrolls rising a seasonally adjusted 151,000, the Labor Department said Friday. The unemployment rate fell to 4.9% last month, the first time below the 5% threshold since February 2008. Federal Reserve officials cited a healthy job market when raising interest rates in December, but the latest report may offer more questions than answers for policy makers. Here’s how economists reacted to the report.
“Although the 151,000 gain in nonfarm payrolls in January was a little below the consensus forecast of a 190,000 gain, the rest of the employment report was very encouraging, with the unemployment rate dropping to an eight-year low of 4.9%. Adding to the good news, average weekly hours worked edged up to 34.6, from 34.5, and average hourly earnings increased by a bigger than expected 0.5% m/m. Base effects mean that the annual growth rate of average hourly earnings edged down to 2.5%, from an upwardly revised 2.7%, but there does now appear to be a clear upward trend in earnings growth.” —Paul Ashworth, Capital Economics
“While we have not changed our view that labor markets remain healthy and, in turn, recession risk for the U.S. economy remains low, the weakness in services sector employment in the establishment report is likely to keep uncertainty about the state of the economy elevated. The divergent signals from the two labor market surveys, in our view, mean the [Federal Open Market Committee] will likely desire to see further evidence to know whether the signal from a strong household survey or a weaker establishment survey is correct. The divergent signal from the employment report, plus the ongoing volatility in financial markets, leads us to revise our outlook for the path of Federal Reserve policy; we now expect two rate hikes this year in June and December, as opposed to three in our previous baseline. —Michael Gapen, Barclays
“The rise in payrolls was well below the recent trend but we suspect most of the slowing merely reflects weather effects and payback for exaggerated strength in the fourth quarter. The three-month average is still a strong 231,000, which is more than enough to keep the unemployment rate trending down over time. That is not to say that the trend could not be changing significantly, but this report is not evidence of such a slowing given the above-trend gains in payrolls in the fourth quarter. Meanwhile, the 2.5% year over year for hourly earnings is up from what had been about a 2% trend. We still think the Fed will pause in March but these data help the case for renewed tightening before too long if markets calm down.” —Jim O’Sullivan, High Frequency Economics
“The data leaves open a March rate hike by the Fed, especially if markets calm down as they tend to do after a period of volatility. The gain in payroll jobs missed estimates but with the drop in the jobless rate and the spike in earnings the risk of a rate hike in March can’t be fully ignored as markets have done. This data builds on the higher unit labor cost reported yesterday for the fourth quarter to suggest the Fed is still on track for a rate hike in March.” —Steven Ricchiuto, Mizuho Bank USA
“Today’s numbers are about momentum, so while 151,000 new jobs in January is below expectations and off pace from prior months, the data shows America’s recovery is continuing. Amid all the global economic turmoil and domestic market gyrations, positive job growth, the drop in the unemployment rate to 4.9%, and the uptick in wages show the U.S. is heading in the right direction. The jobs data will give the FOMC a lot to weigh at its next meeting, and when combined with wages ticking up to 2.5% year over year, should support those advocating for more rate hikes this year.” —Beth Ann Bovino, Standard & Poor’s Ratings Services
“January’s jobs report was all about checks and balances. Wages jumped, check. Job growth slowed, balance. The unemployment rate dipped, check. Underemployment was unchanged, balance. As a result, it’s impossible to paint the labor markets numbers with a single broad brush, but by the same token, there’s nothing in the numbers that suggest a different course of Fed policy in the next several weeks or months.” —Guy LeBas, Janney Montgomery Scott
“While we may not be there yet, this is the sort of report we would expect once the economy reaches full employment. Payrolls growth will eventually slow towards trend labor-force growth (which we estimate is around 100,000 per month). This should be associated with faster wage growth as employers compete for a smaller pool of available labor. So long as household income growth remains strong, the U.S. economy is likely to remain largely insulated from global economic stress.”—Jeremy Schwartz, Credit Suisse
“While this report was not unambiguously positive, it shows a steady pace of hiring that stands in contrast to a wide swath of economic data that points to decelerating economic momentum. The Fed will take solace in the longer-term employment trend but their focus is on assessing the impact of recent market volatility on measures of real activity.” —David Tulk, TD Securities
“If there’s a silver lining for workers, it was in a key compensation gauge. Average hourly earnings increased by 0.5%. As the economy nears full employment, stronger wage gains are to be expected. Coupled with poor productivity in recent quarters, though, the downside is that unit labor costs are rising—a potential precursor to rising inflation, reduced corporate profitability, or both if that trend persists.” —Jim Baird, Plante Moran Financial Advisors
“Hiring continued at a moderate pace last month in the face of a world of trouble. It is good to see the unemployment rate slip, but hiring was a bit shy of expectations. We knew that the job gains in the fourth quarter of last year would be tough to match, but even with the modest reassurance we’ve received thanks to this January hiring snapshot, questions remain about the sustainability of the recovery.” —Mark Hamrick, Bankrate.com
“The January 2016 employment report showed disappointing, below-consensus job gains as well as downward revisions to previously reported job gains in December (although November job gains were revised higher). Although job gains slowed in January, the unemployment rate fell further to 4.9%, which was below consensus expectations. Since the Fed’s dual mandate is to foster full employment and keep inflation at 2%, this report was both weaker than expectations in terms of job gains and supportive of a potential Fed rate hike in March, because of the drop in the unemployment rate.” —Jason Schenker, Prestige Economics
“The jobs market has edged out housing as the economy’s bright spot in the last couple months. Today’s report shows that it’s still possible to create jobs in a slow-growing economy, with positives in manufacturing and earnings growth. Concerning though is that many of these jobs are in low-paying sectors like retail. The problem going forward is that the cities that are adding good jobs aren’t adding housing, worsening affordability.” —Nela Richardson, Redfin
“In all, this dataset is not a game-changer for the economy, but it may start the process of snapping the financial markets out of the gloom-and-doom spell that they have settled into. The global economy is not great, but the U.S. economy is mostly domestic-driven and should be just fine. It is too soon to say whether the Fed will be able and willing to pull the trigger on another rate hike in March, but I am virtually certain that the markets are not pricing in enough tightening this year.” —Stephen Stanley, Amherst Pierpont Securities
“The job market has hit an inflection point downshifting to slower gains. There have been a number of bellwethers pointing to the slowdown in the job market….Even without these problems, employment gains were poised to decelerate. At 4.9%, the economy is approaching full employment and the pool of available people are shrinking. The labor-participation rate continues to ratchet down to multidecade lows. Employers are having hard time matching labor supple and demand. In the future, employment gains will be closer to 100,000 per month.” —Sung Won Sohn, California State University Channel Islands
Related reading:
U.S. January Nonfarm Payrolls Up by 151,000; Jobless Rate 4.9%
Hilsenrath Analysis: Fed March Rate Decision in Limbo
January Jobs Report – The Numbers
The January Jobs Report in 12 Charts
Interactive: Job Market Tracker
from Real Time Economics http://ift.tt/1KuIHS5
No comments:
Post a Comment