Nonfarm employers added a seasonally adjusted 227,000 jobs in January, exceeding economists’ expectations for a 174,000 gain last month. Over the past three months, job growth has averaged 183,000. The pace of hiring has decelerated since 2014 and 2015, but that isn’t necessarily a warning sign about the labor market’s health and could reflect an economy that is approaching full employment.
The jobless rate in January was 4.8%, ticking up from December; economists surveyed by The Wall Street Journal had expected 4.7% unemployment in the first month of 2017. The low unemployment rate is one reason the Federal Reserve has decided to start moving interest rates higher. Fed policy makers in December said the unemployment rate in the long run should sit in the 4.5% to 5% range, with a median longer-run projection of 4.8%.
The share of Americans who had a job or were looking for one in January was 62.9%, up from 62.7% in December. The workforce-participation rate peaked in 2000 and fell sharply after the 2007-09 recession. It remains near levels not seen since the late 1970s, but the rate has leveled off since late 2015—a reflection of stronger conditions in the labor market. Many forecasters expect participation will resume its decline in the coming years due to long-term demographic and economic trends, including the retirement of the baby-boom generation.
Average hourly earnings for private-sector workers were $26.00 in January, up a modest 3 cents from December and rising 2.5% over the past year. Wage growth has firmed over the past couple of years as lower unemployment has forced U.S. employers to compete over a shrinking pool of available workers. But progress has been uneven, and the pace of pay raises remains subdued compared with prerecession levels. One factor that may have helped boost January pay: turn-of-the-year minimum-wage increases in 19 states.
A broad measure of unemployment and underemployment, known as the U-6, was 9.4% in January. That was its highest level since October and nearly twice the level of the official jobless rate, which is known as the U-3. The measure includes discouraged job-seekers who have stopped looking for work, other people marginally attached to the labor force, and part-time employees who say they want but can’t find full-time work.
As of January, 24.4% of unemployed Americans had been out of work longer than six months. That was 1.9 million people, a figure that fell by 244,000 over the previous 12 months. Long-term unemployment remains elevated from prerecession levels, though it has come down since peaking in mid-2010 at a little less than half of the unemployed population.