US Job Growth Declines While the 4.0% Unemployment Rate Remains

Job growth in the US labor market slows down, while the unemployment rate stays at 4.0%.

The unemployment rate stayed at 4.0% in January, which may provide the Fed justification to postpone interest rate decreases until at least June, even if US job creation slowed more than anticipated after robust gains in the preceding two months.

A spike in average hourly wages was also revealed in the Labor Department’s much-awaited employment report on Friday, bolstering consumer spending and reaffirming the labor market’s resiliency as a major engine of economic growth.

Jeffrey Roach, chief economist at LPL Financial, said the data this morning can be referred to as a “Goldilocks report,” meaning it is neither too hot nor too cold. “The Fed has justification to maintain fed funds unchanged in the near future because an unemployment rate of 4% is regarded as extremely low.”

After an upwardly revised gain of 307,000 jobs in December, nonfarm payrolls climbed by 143,000 positions in January. The deceleration was viewed as a correction following November’s 261,000 payroll spike.

An estimated 170,000 additional jobs were anticipated by economists surveyed by Reuters, with predictions ranging from 60,000 to 250,000.

The severe weather in other areas and the wildfires in Southern California in January had “no discernible effect” on payrolls, according to the Bureau of Labor Statistics (BLS). But according to the household survey, 573,000 individuals were unable to work because of the weather, which is the most since 2011.

With 44,000 new jobs added in hospitals, nursing and residential care institutions, and home health services, the healthcare industry led job growth. Social assistance payrolls grew by 22,000, while retail employment surged by 34,000, primarily at general merchandise merchants.

Although hiring in the government sector is anticipated to decline as the Trump administration takes steps to reduce federal jobs, government employment increased by 32,000 positions.

Construction, manufacturing, wholesale commerce, transportation and warehousing, information, financial activities, professional and business services, and the leisure and hospitality sectors all saw a significant decline in employment.

US Treasury rates increased, the dollar appreciated vs a basket of currencies, and stock markets started largely unchanged after the data.