The U.S. jobless rate edged up to 4.8 percent in January, the first partial month of Donald Trump’s presidency, as steady if more modest wage growth indicated the economy is still chugging along.
The unemployment number is a minor increase compared to December’s 4.7 percent level. The total number of unemployed people in January changed little, at 7.6 million, in keeping with recent trends, the Labor Department reported on Friday.
One reason for the uptick in the jobless rate was heartening: More Americans started looking for work last month. The percentage of adults working or looking for jobs climbed to its highest level since September.
The so-called underemployment rate -- which includes part-time workers who seek a full-time job and those who want work have stopped looking -- increased a small amount, to 9.4 percent from 9.2 percent. On the plus side, this metric, known as U-6 unemployment, has decreased markedly in the past couple of years.
Hourly pay didn’t show as much oomph as before, rising 2.5 percent from a year earlier. Last month, wages rose a further three cents to $26 an hour after climbing 10 cents in December.
A pay growth slowdown since the Great Recession has worried economists, although the situation has improved somewhat. January’s decrease in tempo signaled renewed concern from Gus Faucher, PNC Financial’s deputy chief economist. “Wage growth has picked up over the past few years, but it remains tepid,” he noted, “which is surprising given that the U.S. economy has added more than 15 million jobs over the past seven years and that the unemployment rate has been at or below 5.0 percent for 17 straight months.”
To Ian Shepherdson, chief economist at Pantheon Macroeconomics, the soft earning increase was “baffling.” He said that because January saw big increases in minimum wages in many states, that should have added over 0.2 percentage points in wage growth.
Employers added 227,000 jobs in January, above the revised 157,000 tally for December and the most since September. The trend in nonfarm payrolls for 2016 is below that of previous years. The average monthly boost in 2015 was a strong 229,000, and a less stellar 180,000 last year.
Friday’s news had an optimistic precursor, from the ADP employment report, which showed a jump on private payrolls of 246,000, above analysts’ consensus of 168,000.
The impact of the jobs report on the Federal Reserve is always an intense source of speculation. The Fed’s policymakers left the benchmark interest rate alone Wednesday, although they have signaled the possibility for three rate increases this year. The question is when will they act.
“This report makes a March hike less likely, but doesn’t kill it,” economist Shepherdson observed, referring to the muted wage growth, which might cause the Fed to hold off. Should the employment picture remain steady in February and wage increases accelerate more robustly, he said, “they could easily still hike.”
Another highlight was that mining and construction, both cyclical industries, led in job growth. “That’s great news for blue-collar workers who have struggled and are now under the political spotlight,” Jed Kolko, chief economist at job site Indeed wrote. “But these gains will be hard to sustain.”
There’s much anticipation of still more more job creation if President Trump’s plans to boost infrastructure spending and lower corporare and income taxes come to pass. However, as Mark Hamrick, Bankrate.com’s senior economic analyst in Washington, pointed out, “that’s going to take more time. The potential benefits of tax cuts and spending on improvement of roads and other infrastructure components remain months away.”