Despite political headlines dominating the news, the markets -- most notably international markets -- continued to provide positive returns in January.
The January Jobs Report
Depending on which survey you look at, economic experts predicted the economy would add an average of between 175,000 and 180,000 jobs in January.5 Instead, on Friday, the Bureau of Labor Statistics’ report showed the economy added 227,000 jobs last month—far higher than predicted.6 This increase means job growth has continued for 76 months in a row.7
You gain a much clearer picture, however, when you look beyond the big headlines and see what other data tells us. Here’s a quick rundown of what we found:
Hourly Earnings Increased, but by a Very Small Margin
Hourly Earnings Increased, but by a Very Small Margin
Average hourly earnings grew by only 3 cents in January—and showed a 2.5% increase over last year.8 This monthly growth is less than a third of what we saw in December 2016.9 However, one industry in particular may have caused these slower gains, as a 1% decrease in financial industry earnings depressed overall wage growth.10
Unemployment Increased, but for a Potentially Positive Reason
When you hear that unemployment increased from 4.7% in December to 4.8% in January, this may sound like bad news.11 However, a major reason for this increase is that labor force participation grew by 0.2% in January, the first increase in months.12 In other words, after sitting on the sidelines, more people are now rejoining the labor force and creating additional opportunities for economic growth.13
Jobs Are Available, but Workers May Need Training or Relocation
Jobs Are Available, but Workers May Need Training or Relocation
While labor force participation increased last month, its 62.9% rate is still near the lowest level in decades.14According to Glassdoor Chief Economist Andrew Chamberlain, approximately 5.5 million jobs remain open in the U.S.—close to a record number.15 Some of these jobs, such as retail and food service, don’t require much training, but they aren’t always located near where unemployed workers live. Other jobs in the hot fields of healthcare and technology require training and skills that many workers simply do not have right now.16 As a result, closing the gap between open jobs and willing workers is a complex challenge for employers and job-searchers alike.
The Bottom Line
The labor market is continuing to improve, but the pace remains slower than what most people would prefer. Nonetheless, the Bureau of Labor Statistics’ latest revisions show that private-sector payrolls have increased for 83 straight months, the longest growth streak since the 1920s.17
The Bottom Line
The labor market is continuing to improve, but the pace remains slower than what most people would prefer. Nonetheless, the Bureau of Labor Statistics’ latest revisions show that private-sector payrolls have increased for 83 straight months, the longest growth streak since the 1920s.17
To Your Prosperity,
Kevin Kroskey, CFP®, MBA
This article adapted with permission from Platinum Strategies.
