January a Strong Month for the Economy

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While the economy has been slow to recover from the Great Recession, there have been a number of strong monthly jobs reports recently. The report for January 2015 may be the best yet. Most of the previous positive reports have had a caveat to them. Job openings might have been up with wages remaining stagnant. Or the unemployment rate dropped, but only because people left the workforce.

The January report showed growth in all of the important areas. Wages notched growth of half a percentage point, or 12 cents per hour. The workforce grew by 703,000, bringing the labor force participation rate up by 0.2 percent. And while the unemployment rate rose, it increased by only a tenth of a point, half the growth in labor participation. On top of that, the reports for the previous months were revised upward, with revised figures for November 2014 showing a total gain in that month of 423,000 jobs, more than had been added in a single month in 18 years. Job growth for December 2014 was revised upward by 77,000 jobs, as well.

The new jobs report paints a bright overall picture of the economy in the United States. The unemployment rate of 5.7 percent was lower than the long-term average and far lower than Europe’s jobless rate. Wages were 2.2 percent higher in January than they were a year ago, and growth occurred in many industries. Retail added 46,000 jobs, health care added 38,000 jobs, and financial services added 26,000 jobs. In the past, balanced economic growth has often portended strong growth overall.

Workers interested in changing jobs may also be interested to know that changes occurred in the number of job openings and people quitting jobs. Job openings rose by 3.7 percent to 5 million after adjusting for seasonality. The number of people who quit their jobs also rose, to 2.7 million. Both metrics bode well for job seekers, as they reflect increased confidence about finding work and a desire among businesses to staff up and prepare for further growth.

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