Jobs Report Shows 'Solid Trends'
The U.S. economy created 111,000 new jobs in January, according to new Labor Department data, and some 2.2 million jobs for all of 2006, an average of 187,000 a month. It marked the 41st consecutive month that the economy added new jobs. The unemployment rate ticked up to 4.6 percent, though it's still down from 4.9 percent a year ago and 6.3 percent in June 2003.
"The right way to look at this report is that we are getting solid trends in payrolls," said Bruce Kasman, chief economist at JPMorgan Chase, in a morning conference call.
Among the sectors showing the strongest job growth last month were healthcare, up 18,000, and professional and business services, 25,000. There was more weakness in manufacturing, however. Job losses continued in motor vehicles and parts, down 23,000. Elsewhere, furniture and related products employment fell by 4,000, while computer and peripheral equipment lost 6,000 jobs over the month.
The downturn in the housing sector also took a toll on specialty residential trade jobs. Since its peak in February 2006, residential specialty trade contracting has lost 104,000 jobs while its nonresidential counterpart has added 126,000 jobs.
On the wage front, average hourly earnings for production and nonsupervisory workers in the nonfarm private sector increased by 3 cents, or 0.2 percent, in January to $17.09. This increase followed a gain of 7 cents in December. Over the year, hourly earnings rose by 4.0 percent, down a bit from year-over-year gains of 4.2 percent in December.
"[That's] an encouraging sign for inflation," notes Sharon Stark, bond analyst at Stifel Nicolaus. "The moderation in the earnings data should catch the attention of Fed policy makers who have voiced concern over tighter job markets and potentially higher wage gains."
Today's jobs and wage numbers, when combined with the placid Federal Reserve statement from earlier this week, has "reinforced the likelihood that the Fed can stay on the sidelines for months to come," says Lyle Gramley, chief economist at the Stanford Group.