Friday, February 02, 2018

Comments on January Employment Report

by Bill McBride on 2/02/2018 10:55:00 AM

The headline jobs number was above consensus expectations at 200 thousand, however the previously two months were revised down a combined 24 thousand.  Overall this was a strong report, with a nice pickup in wage growth.

Earlier: January Employment Report: 200,000 Jobs Added, 4.1% Unemployment Rate

In January, the year-over-year employment change was 2.114 million jobs. This has been generally trending down, but is still solid year-over-year growth.

Average Hourly Earnings

Wages CES, Nominal and RealClick on graph for larger image.

This graph is based on “Average Hourly Earnings” from the Current Employment Statistics (CES) (aka "Establishment") monthly employment report. Note: There are also two quarterly sources for earnings data: 1) “Hourly Compensation,” from the BLS’s Productivity and Costs; and 2) the Employment Cost Index which includes wage/salary and benefit compensation.

The graph shows the nominal year-over-year change in "Average Hourly Earnings" for all private employees.  Nominal wage growth was at 2.9% YoY in January.

Wage growth had been trending up, although the acceleration in wage growth slowed in 2017.

Part Time for Economic Reasons

Part Time WorkersFrom the BLS report:

The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) was essentially unchanged at 5.0 million in January. These individuals, who would have preferred full-time employment, were working part time because their hours had been cut back or because they were unable to find a full-time job.
The number of persons working part time for economic reasons has been generally trending down, however the number increased slightly in January. The number working part time for economic reasons suggests a little slack still in the labor market.

These workers are included in the alternate measure of labor underutilization (U-6) that increased to 8.2% in January.

Unemployed over 26 Weeks

Unemployed Over 26 WeeksThis graph shows the number of workers unemployed for 27 weeks or more.

According to the BLS, there are 1.42 million workers who have been unemployed for more than 26 weeks and still want a job. This was down from 1.52 million in December

This is the lowest level since April 2008.

This is trending down, but remains a little elevated.

The headline jobs number was solid, and the unemployment rate unchanged at a low level, and wage growth picked up - overall a strong report and a continuation of multi-year trends.