Solid Job Gains—A Story of Economic Expansion
January’s increase of 243,000 in nonfarm jobs continued the string of monthly job gains in many sectors as evidenced by the positive turns in all three super sectors shown in the top graph. Consistent monthly gains have been evident in business services, education, health and leisure and hospitality. Hiring in construction increased by 21,000 jobs and was aided by mild weather, but also by gains in multifamily construction. Job gains in general were helped by warmer than usual weather, as there were 224,000 fewer than average workers who were unable to get to work due to weather. Manufacturers added 50,000 jobs during the month, with solid gains at fabricated metals, motor vehicles and machinery. Average weekly hours worked in manufacturing rose 0.3 percent in January, with an additional uptick in overtime.
Hours Worked: Steady Gains—No Acceleration, No Slowdown
Total hours worked rose 0.2 percent in the private sector and a sharp
1.2 percent in manufacturing. These gains are consistent with continued growth in the overall economy. It is important to remember that a one-tenth increase in average weekly hours worked is equal to an additional 384,000 jobs at the current average, and 330,000 jobs using a “full-time” 40 hour workweek. January’s drop in the unemployment rate to 8.3 percent reflected a large gain in household employment that exceeded the gain in the labor force. Unemployment rates for both men and women over 20 years declined, while the unemployment rate for teenagers rose a touch in January to
23.2 percent. Over the past year, we have witnessed broad gains in employment in a number of sectors, while unemployment rates for many occupations have declined. This is a good sign for growth in the economy going forward.
Income Growth: Slower Than Prior Cycles, But Still Positive
The rise in employment, hourly earnings and hours worked will bolster income growth. Average hourly earnings rose 0.2 percent in January, while weekly earnings rose 0.2 percent and weekly earnings are up 2.5 percent year over year.
The better news on earnings helps improve consumer incomes and, thereby, confidence and consumer spending. In the latest month, aggregate weekly hours are up over one percent in the manufacturing and utilities industries, and a gain of 0.8 percent in transportation and warehousing.
All of this suggests that the U.S. economy has sustained growth in a broad number of sectors. Our challenge remains that many workers are structurally unemployed and unable to jump on the growth train.