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The nation’s unemployment rate ticked down below 5 percent in January 2016 for the first time since early 2008, according to the latest data released by the Bureau of Labor Statistics.
The good news was tempered somewhat by less-than-expected job growth in January compared with preceding months. U.S. employers added 151,000 jobs in January, the weakest month for job gains since September 2015.
“This is positive news, even though adding just 151,000 jobs felt like a swing and a miss after steady payroll growth of over 200,000 a month in previous months,” said Tara Sinclair, chief economist for job site Indeed.
“The slightly lower than expected job gains were somewhat disappointing, but still enough to bring down the unemployment rate,” said Jennifer Schramm, SHRM-SCP, manager of workforce trends at the Society for Human Resource Management.
Adult men, whites, Asians and Hispanics experienced the most significant drops in unemployment in the first month of the year. The rate for Hispanics dropped from 6.3 percent to 5.9 percent; the rate for Asians came down from 4 percent to 3.7 percent; the rate for whites from 4.5 percent to 4.3 percent; men’s jobless rate fell from 4.7 percent to 4.5 percent.
The unemployment rate for blacks rose precipitously from 8.3 percent in December 2015 to 8.8 percent in January after dropping a full percentage point from 9.4 percent in November 2015. The jobless rate for adult women (4.5 percent) and teenagers (16 percent) held steady in January from the month before.
“The start of the year has finally given us below 5 percent unemployment, which is a positive indicator in light of the fact that it comes from people joining the workforce, and not dropping out,” Sinclair said. She pointed out that the labor force participation rate rose slightly from 62.6 percent to 62.7 percent. The rate, which tracks the percentage of the civilian population that either has a job or is actively looking for one, had bottomed out in September 2015 at 62.4 percent—a nearly four-decade low, but has trended up now for two consecutive months.
“It’s not as much as we’d like, but a sign that unemployment dropped for good reasons that will contribute to economic growth,” Sinclair said.
Several Industries Show Improvement
Retailers added 58,000 jobs in January, while at the same time announcing over 75,000 layoffs.
Most new jobs reported were 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).
Other employers adding jobs in January included restaurants and bars (47,000), health care (37,000), manufacturing (29,000) and financial activities (18,000).
Employment in transportation and warehousing decreased by 20,000 jobs in January, mostly among couriers and messengers (-14,000), reflecting larger than usual layoffs following strong seasonal hiring in the prior two months, according to the BLS.
Mining work continued to decline in January (-7,000). Since reaching a peak in September 2014, employment in the industry has fallen by 146,000 jobs, or 17 percent.
Employment in temporary help services slipped down in January (-25,000), after edging up by the same amount in December 2015.
Overall, “employer demand is still high, suggesting that there is opportunity get back to stronger job gains,” Sinclair said. “However, though manufacturing ticked up in the report, our data is showing forward-looking job listings in that sector have hit a plateau. Manufacturing continues to be a sector of concern in the coming months.”
Wages Showing Momentum?
The most positive aspect of the report was the pickup in wages, Schramm said. Average hourly earnings increased by 12 cents in January 2016 to $25.39. Hourly earnings have risen by 2.5 percent over the year, potentially signalling a positive trend. Sluggish wage growth has been a sore spot in the U.S. economic recovery over the last few years.
The uptick “aligns with our findings that continue to show recruiting difficulty and new-hire compensation ticking up,” Schramm said. “This could be a sign that the labor market is tightening.”
Roy Maurer is an online editor/manager for SHRM.
Follow him @SHRMRoy
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