Job creation increased by 151,000 in January, slightly lower than market expectations, the Bureau of Labor Statistics said.
In December, job creation grew by 292,000, cementing the growing strength of the labor market.
“Following outsized gains during the fourth quarter of last year, the consensus expectation was for job gains to moderate in January,” said Doug Duncan, chief economist with Fannie Mae. “Though the headline nonfarm payroll increase came in somewhat weaker than market expectations, details pointed to a solid labor market.”
Both the number of unemployed persons, which fell to 7.8 million, and the unemployment rate, which came in at 4.9%, were little changed in January.
Duncan noted that the unemployment rate fell below 5% for the first time in nearly 8 years as the labor force participation rate edged up for the second consecutive month.
“Despite the equity market crosscurrents, it appears that labor market conditions remain healthy. The fed funds futures market apparently wrote off a March rate hike before this report,” sad Duncan. “However, we feel today’s report offers little clue about near-term Fed actions, nor does it alter our expectation for only modest increases in mortgage rates during 2016, which is a positive for a housing market challenged by affordability constraints.”
Over the past 12 months, the number of unemployed persons and the unemployment rate were down by 1.1 million and 0.8 percentage point, respectively.
The civilian labor force and total employment, as measured by the household survey, were little changed in January, while the labor force participation rate, at 62.7%, was also little changed.
“We have seen meaningful improvements in the participation rate over the past six months which suggests that more sidelined workers are being brought back into the labor pool,” said National Association of Federal Credit Unions Chief Economist Curt Long.
Average hourly earnings for all employees on private nonfarm payrolls grew by 12 cents to $25.39, marginally up from $25.24 last month.
“Turbulence in the stock market and fears for the prospects of global growth are likely taking a toll, but the overall picture is one of a labor market that is drawing near to full employment. While nominal wage growth is still slightly below historical norms, it is still outpacing inflation by a decent margin,” said Long.
Redfin chief economist Nela Richardson commented on the report saying, "The jobs market has edged out housing as the economy's bright spot in the last couple months. Today's report shows that it's still possible to create jobs in a slow growing economy, with positives in manufacturing and earnings growth. Concerning though is that many of these jobs are in low-paying sectors like retail. The problem going forward is that the cities that are adding good jobs aren't adding housing, worsening affordability."