U.S. Employment Situation – Jan 2018

Released Friday, February 2, 2018

downloadsNonfarm Payrolls: +200,000 month-over-month (Cons: +180,000), +2.11 million year-over-year
Unemployment Rate: 4.1% (Cons: 4.1%), Unchanged month-over-month, -0.7 ppt year-over-year
Weekly Hours: 34.3 hours (Cons: 34.5 hours), -0.2 hours month-over-month, -0.1 hours year-over-year
Hourly Earnings: $26.74, +0.3% month-over-month (Cons: +0.2%), +2.9% year-over-year

Quick Take:
Private payrolls increased by 200,000 in January, which was above the consensus estimate. December and November payroll gains figures were revised down by -24,000 collectively. January’s figure is above the 2017 monthly payroll gain average of 181,000.

The payroll gain for January indicates that the labor market remains healthy to start 2018. January marks the 88th consecutive month in which the number of payrolls has increased, and the labor market has tightened considerably since the start of the recovery. The number of people looking for full-time or part-time work is now lower than it was prior to the financial crisis. Additionally, the ratio of long-term unemployed (those unemployed for 27 weeks or longer) has fallen to approximately 1 in 5 unemployed persons, versus almost 1 in 2 in 2009. We continue to expect the labor market to show job gains as any remaining slack gets pulled into the labor market.

The unemployment rate has been steady at 4.1% over the last four months, after declining 0.7 percentage points in the prior eight months. This is another indication of the shifting conditions in the labor market.
Wage growth also showed signs of acceleration in January, as average hourly earnings grew faster than expected. Average hourly earnings for all employees were up 2.9% year-over-year in January, the highest growth since 2009. While there were some temporary factors in January that likely pushed up hourly earnings in the month (i.e. weather that reduced hours worked), the trend has been towards higher year-over-year growth, including an upward revision to the December reading.