This past January U.S. nonfarm payrolls grew by a seasonally adjusted 2
57,000 jobs according to the Bureau of Labor Statistics. Surprisingly, though, the unemployment rate rose slightly from 5.6% to 5.7%. The reason for the rise in unemployment despite job growth is likely due to discouraged workers now looking for jobs. This might represent growing confidence in the economy among the U.S. working age population. The rise in average hourly wage between December and January was 0.5%, beating expectations of 0.3%. Interestingly, this job growth came in light of the contracting oil and gas market, where jobs fell by 1,900. On the other hand, retail, manufacturing, and construction jobs made up for this deficit and posted the biggest gains. Analysts are interested to see if this job growth trend will spark any new action from the Fed.
Sources: BLS and WSJ News-Economy update
3 Comments
My estimate is that, thanks to the retirement of the baby boomers, the economy only needs to add about 60,000 jobs to keep up with population-based potential labor force growth. So on net we’ve added 200,000 jobs. Unfortunately, using that same methodology to adjust the size of the potential labor force relative to the 2000-2006 base, which was quite stable, we’re about 7 million jobs short. If we keep adding 200,000 jobs per month we’ll be back to normal in 35 months, or about 3 years, late 2017. Let’s see, and you graduate in … er,
Another important thing that we should think about is what ‘kind’ of jobs will be added to labor market. For instance, I read a paper by David Autor in which he discusses diminishing job opportunities for middle skill/wage sector due to automation, offshoring, and international trades. On the other hand, demand for both high skill and low skill occupations have been on a rising track. Since a lot of recent college graduates start their first full time jobs in entry-level (i.e. clerical works, managerial occupation, etc), this trend will disproportionately affect our generation…er,
The rise in unemployment despite job growth definitely has to do with discouraged workers which may have a lot to do with job mismatch. A book called “The New Geography of Jobs” by Enrico Moretti published in 2013 talks not only about unemployment in the United States but about where the jobs are and how growth of some cities and the decline of others have to do with specific industries within those cities. Can we be more industry and region specific when talking about unemployment and jobs?
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