The Bureau of Labor Statistics released their January 2015 jobs report that showed the economy grew by 257,000 jobs and the unemployment rate had a modest increase at 5.7 percent. This is a good sign because January and February are typically slow hiring months with weather being a factor. Over the last six months, we have gained at least 250,000 jobs or more in four of those months with an average job growth of 282,000.
Here is why the figure of 282,000 is significant. If we can maintain this pace over the next two years, then we can close the jobs gap originating from the Great Recession before 2017. Even though we have recovered all of the jobs lost from the Great Recession, a gap remains because there were not enough jobs created to account for the growth in the labor force.
When consumers feel that low gas prices will be permanent, we feel ‘richer’ and that will show in our spending habits. As a result, we have seen retail trade employment grow by 46,000. Other industries enjoying gains include health care, financial services, and manufacturing.
Another encouraging sign is in construction. Despite January typically being a slow month due to weather, there was a gain of 39,000 jobs. This figure exceeds monthly average of 28,000, thus suggesting that the housing market and business activity might see gains in the future.
Previously, we have seen job gains, but wages have been stagnant. Hopefully, that trend will begin to reverse, which we have seen in January with average hourly wages increasing by 25 cents. Even though the Fed will closely monitor wage growth for concern of inflation, Americans will be gratified to see their pay increase in the future.
Here are three graphs courtesy of the St. Louis Fed’s FRED research website that show how much the labor market has improved over the last year.
- Civilian unemployment rate is steadily falling.
- The alternative measure of unemployment (U-6) rate that attempts to measure discouraged workers and underemployed workers continue to fall.
- Part-time employment for economic reasons is also falling.
We are off to an encouraging start in January, so let’s hope the momentum continues through the year.