January 2016 Jobs Report

Unemployment Rate: 4.9 percent

Unemployed Americans: 7.8 million

Employment and Unemployment

1. The Department of Labor reported an unemployment rate of 4.9 percent for January, down 0.1 percentage point from last month. It reported an increase of 151,000 nonfarm jobs in January. Employment for November was revised up from 252,000 to 280,000 jobs created; and December was revised up from 292,000 to 262,000.   
2. Today’s job creation figure is lower what was anticipated by economists surveyed prior to today’s report. Those surveyed anticipated job growth of 185,000.  
3. As noted in the Wall Street Journal, today’s weaker-than-expected payroll number signals that recent stock-market turmoil and economic weakness abroad have prompted some caution among businesses.  
4. Unemployment in January among those ages 16-19 was 16.0 percent, down 0.1 percent from last month. Among those 20-24, the unemployment rate was 8.2 percent, down 1.2 percentage points from December. For African-Americans, the unemployment rate was 8.8 percent, up 0.5 percentage points from last month.
5. The number of long-term unemployed, those unemployed for 27 weeks or more, was 2.1 million. They account for 26.9 percent of the unemployed, up from 26.3 percent in the prior month and down from 31.0 percent a year ago. 
6. The “real” unemployment or U-6 rate is 9.9 percent, unchanged from last month. This is the total percentage of unemployed and underemployed workers. 
7. The “real” number of unemployed Americans is 15.9 million. These are people who are unemployed (7.8 million), want work but have stopped searching for a job (2.1 million), or are working part time because they cannot find full time employment (6.0 million). 
8. In January, employment grew by 58,000 in retail trade; 47,000 in food services and drinking places; 37,000 in health care employment, and 29,000 in manufacturing. Employment in transportation and warehousing decreased by 20,000 last month, and employment in mining fell by 7,000 in January, following a decline of 129,000 in 2015. 

Labor Force Participation

1. The labor force participation rate is 62.7 percent, up 0.1 from last month and remaining near the lowest level in 38 years. The persistently low labor force participation rate shows that millions of Americans are staying on the sidelines. Since April 2014, the participation rate had been stuck in a narrow range of 62.4 and 62.9 percent. Prior to the recession, the rate stood at 66 percent.  
2. If the labor force participation rate were the same as when President Obama took office, the unemployment rate would be 9.2 percent.
3. The share of American adults with jobs in January was 59.6 percent, up 0.1 percent from last month. This is about 4 percentage points below its pre-recession peak, and relatively unchanged since October 2014.  
4. In December 2015, the Federal Reserve voted to raise its main interest rate by 0.25 percent. It was the first rate increase in almost 10 years. The Fed noted at the time that it anticipates that economic conditions will evolve in a way that will warrant only gradual increases in the federal funds rate. The Fed statement following its January meeting mirrored this position. Some analysts predict that today’s report showing a slowing in the labor market could impact the Fed’s decision at its next meeting in March.  

Wages

1. 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 percent. 
2. January was the 78th straight month that year-over-year hourly wage growth has been at or below 2.5 percent. Prior to the recession, wage growth routinely exceeded three percent.  
3. As noted in the Wall Street Journal, modest wage growth remains a concern. A tighter labor market should lead to higher wages and ultimately stoke consumer inflation. Without stronger wage gains, it will be difficult for inflation to move back toward the Fed’s 2 percent annual target.