Jones Lang LaSalle
February 3, 2006
Jobless Rate Falls to Lowest Level in More Than 4 Years
By VIKAS BAJAJ
The unemployment rate fell to its lowest level in four and a half years in January, the government reported today, as the economy added construction, education, health and other jobs.
Employment was up in virtually every sector of the economy and the country as a whole added 193,000 jobs, the Labor Department reported. The unemployment rate fell to 4.7 percent, the lowest it has been since July 2001.
The report also revised upward the employment gains for November and December, increasing the total number of new jobs created in those months to 81,000. Though total job growth remains at a slower pace than at this point in past recoveries, the 687,000 jobs added in the last three months was one of the strongest showings of the current economic expansion.
With those additions and other revisions to the 2005 data taken into account, the economy added an average of 174,000 per month in the last 12 months. Economists estimate that the nation needs to add roughly 150,000 jobs a month just to keep up with population growth.
Though January's report fell short of economists' expectation of about 250,000 new jobs, it showed broad-based strength. The construction industry added 46,000 jobs, perhaps reflecting the warmer than usual January, and the number of education and health services jobs increased by 39,000. Employment was up in all parts of the economy except for retail services, in which jobs decreased by 2,000, and the government, which was down 1,000.
"This is one of the very-easy-to-interpret reports," said Ethan Harris, chief United States economist for Lehman Brothers. "In this one, everything lined up like the planets."
The unemployment rate also fell across most major population groups, except teenagers, who saw a slight increase. It fell the most for blacks, to 8.9 percent from 9.3 percent, and for adult men, to 4 percent from 4.3 percent.
Average wages, which have lagged behind inflation for much of the last year, were up 0.4 percent, or 7 cents an hour, to $16.41, indicating that workers are gaining some ground in a tightening labor market after anemic gains of recent years.
If the increase in incomes keeps up at this pace in the coming months it could prompt the Federal Reserve's policymakers to raise its benchmark short-term interest rate, now at 4.5 percent, when they meet on March 28, economists said. Sharply rising wages are often seen as a harbinger of inflation because they allow people to bid up the price of goods and services.
"We have not seen any inflation yet, but what we have heard is an inordinate number of price increase announcements in the third or fourth quarter, but they were not supposed to take effect until Jan. 1," said Richard Yamarone, director of economic research at Argus Research in New York.
Stocks were trading moderately lower this morning, as investors took into account the probability of another interest rate increase, which the Fed last raised earlier this week. The Standard & Poor's 500-stock index was down 0.5 percent. Bond prices initially fell after the employment report came out, but they have since recovered.
Among people who evacuated their homes because of Hurricane Katrina in late August, the unemployment rate rose to 14.7 percent in January from 12.4 percent in December.
About half the 1.2 million people who left their homes because of the hurricane had returned by January, most of whom were employed; the unemployment rate for returnees was 2.9 percent in January, down from 5.6 percent in December. But the situation appears to be getting worse for those who have not returned; the unemployment rate for them rose to 26.3 percent from 20.7 percent in December.
Separately, the University of Michigan's index of consumer confidence dipped slightly to 91.2 this month from 91.5 in December. The latest reading was down from an earlier estimate of 93.4.
February 3, 2006
Jobless Rate Falls to Lowest Level in More Than 4 Years
By VIKAS BAJAJ
The unemployment rate fell to its lowest level in four and a half years in January, the government reported today, as the economy added construction, education, health and other jobs.
Employment was up in virtually every sector of the economy and the country as a whole added 193,000 jobs, the Labor Department reported. The unemployment rate fell to 4.7 percent, the lowest it has been since July 2001.
The report also revised upward the employment gains for November and December, increasing the total number of new jobs created in those months to 81,000. Though total job growth remains at a slower pace than at this point in past recoveries, the 687,000 jobs added in the last three months was one of the strongest showings of the current economic expansion.
With those additions and other revisions to the 2005 data taken into account, the economy added an average of 174,000 per month in the last 12 months. Economists estimate that the nation needs to add roughly 150,000 jobs a month just to keep up with population growth.
Though January's report fell short of economists' expectation of about 250,000 new jobs, it showed broad-based strength. The construction industry added 46,000 jobs, perhaps reflecting the warmer than usual January, and the number of education and health services jobs increased by 39,000. Employment was up in all parts of the economy except for retail services, in which jobs decreased by 2,000, and the government, which was down 1,000.
"This is one of the very-easy-to-interpret reports," said Ethan Harris, chief United States economist for Lehman Brothers. "In this one, everything lined up like the planets."
The unemployment rate also fell across most major population groups, except teenagers, who saw a slight increase. It fell the most for blacks, to 8.9 percent from 9.3 percent, and for adult men, to 4 percent from 4.3 percent.
Average wages, which have lagged behind inflation for much of the last year, were up 0.4 percent, or 7 cents an hour, to $16.41, indicating that workers are gaining some ground in a tightening labor market after anemic gains of recent years.
If the increase in incomes keeps up at this pace in the coming months it could prompt the Federal Reserve's policymakers to raise its benchmark short-term interest rate, now at 4.5 percent, when they meet on March 28, economists said. Sharply rising wages are often seen as a harbinger of inflation because they allow people to bid up the price of goods and services.
"We have not seen any inflation yet, but what we have heard is an inordinate number of price increase announcements in the third or fourth quarter, but they were not supposed to take effect until Jan. 1," said Richard Yamarone, director of economic research at Argus Research in New York.
Stocks were trading moderately lower this morning, as investors took into account the probability of another interest rate increase, which the Fed last raised earlier this week. The Standard & Poor's 500-stock index was down 0.5 percent. Bond prices initially fell after the employment report came out, but they have since recovered.
Among people who evacuated their homes because of Hurricane Katrina in late August, the unemployment rate rose to 14.7 percent in January from 12.4 percent in December.
About half the 1.2 million people who left their homes because of the hurricane had returned by January, most of whom were employed; the unemployment rate for returnees was 2.9 percent in January, down from 5.6 percent in December. But the situation appears to be getting worse for those who have not returned; the unemployment rate for them rose to 26.3 percent from 20.7 percent in December.
Separately, the University of Michigan's index of consumer confidence dipped slightly to 91.2 this month from 91.5 in December. The latest reading was down from an earlier estimate of 93.4.
posted by Jones Lang LaSalle NJ News Blog at 12:54 PM
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