"MI Responds" features real-time commentary from Manhattan Institute scholars on breaking news and developing issues. Click here to view more.
The January jobs picture was mixed—lower job creation, but a lower unemployment rate, and a pick-up in average hourly earnings. The economy created 151,000 jobs, lower than expectations. Many of the jobs were in sectors that paid lower than average, such as leisure and hospitality (44,000 jobs), healthcare and social assistance (44,000), and retail (58,000). The economy lost jobs in transportation (20,000) and, as might be expected after the Christmas season, temporary help services (25,000).
Data from the current population survey is not directly comparable to the prior month because of changes in population estimates, but it is encouraging that the unemployment rate now stands at 4.9 percent, the lowest since 2008. The labor force participation rate is at 62.7 percent, still at 1977 levels, but showing that more Americans entered the labor market in search of work. Average hourly earnings rose 0.5 percent in January, so people will have more money to spend. This will give the Fed something to ponder as it considers whether to continue its increase in rates.
Diana Furchtgott-Roth is a Senior Fellow and Director of Economics21 at Manhattan Institute