Unemployment fell to an eight-year low, while lay-offs saw a jump, and consumer credit enjoyed better-than-expected performance.
The unemployment rate dropped to 4.9 percent in January, as the economy added 151,000 jobs, the Bureau of Labor Statistics reported last week. This was the lowest unemployment rate in eight years. Key sectors for job growth were retail trade, food services, drinking establishments, healthcare, and manufacturing.
All told, there were 7.8 million unemployed Americans, with the number of people unemployed for 27 weeks or longer, totaling 2.1 million people, or 26.9 percent of the total. The number of Americans involuntarily employed on part-time basis due to reasons such as their hours being cut or that being the only work they could find, hovered at 6 million Americans. That said, January’s part-time figure was down by 796,000 people over January 2014.
While the continued decline in overall unemployment was encouraging, another positive sign was that earnings were up. Average hourly earnings for nonfarm employees increased by 12 cents to $25.39. Over the past 12 months, average hourly earnings have risen by 2.5 percent.
“That gain in average hourly earnings is significant,” Economist Diane Swonk, told the New York Times. “… It’s a move in the right direction, and that’s reassuring.”
Initial Jobless Claims
Looking at more recent job activity, lay-offs notched up with first-time claims for unemployment benefits filed by the newly unemployed hitting 285,000, a gain of 8,000 claims over the prior week’s total of 277,000, the Employment and Training Administration reported.
The gain pushed lay-offs closer to the 300,000-claim mark that economists say delineates a growing job market from a contracting one. In this case, the gain could be weather-related, due to the tough winter weather the east endured at the end of January.
“Typically, this sort of weather event tends to cause a brief increase in claims, as business closures and disruptions lead to a flow of filings,” Amherst Pierpont Securities Chief Economist Stephen Stanley wrote in a public statement.
The four-week moving average — considered a more stable measure of lay-off activity — ticked up to 284,750, an upturn of 2,000 claims from the preceding week’s average of 282,750.
Consumer borrowing grew by a solid 7.2 percent in December to hit $3.54 trillion, according to last week’s report from the Federal Reserve. A $21.3 billion increase, this was well about the $16.5 billion gain that the market had expected.
Many credit watchers chalked up the gain to increased consumer spending during December, but that didn’t tell the whole story. December’s growth was pretty evenly split between the two main types of consumer credit: Revolving debt, such as credit cards, increased 7.5 percent for the month to hit $935.6 billion, while non-revolving debt, such as car and student loans, grew by 7.1 percent to hit $2.61 trillion.
This week we can expect:
Tuesday — Wholesale inventories for December from the Census Bureau.
Wednesday — The January budget from the Treasury Department.
Thursday — Initial jobless claims for last week from the Employment and Training Administration.
Friday — Import and export prices and retail sales for January from the Census Bureau and the Bureau of Economic Analysis; December business inventories from the Census Bureau.