State of the Labor Market

January Jobs Report: Even the Bad News Wasn’t So Bad

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Job gains have accelerated, led by blue-collar sectors.

The jobs recovery marches on. Over the past quarter, job gains have accelerated, even though the recovery is now in year eight. Blue-collar sectors led the charge: mining and construction once again were the fastest growing sectors. Plus, manufacturing is keeping up with overall growth at the moment, though not enough to dent the long-term trend away from manufacturing. The best news was the much-awaited jump in wages, to 2.9%, the fastest annual increase since mid-2009. While the monthly wage series is volatile, this acceleration is consistent with the compensation index the BLS released this week.

The bad news wasn’t even so bad. Two broad measures of employment — the U-6 underemployment rate and the prime-age employment-population ratio (EPOP) — both ticked slightly worse in January. Over the long run, wage growth tends to track prime-age EPOP, so January’s jump in wages probably overstates what workers are seeing in their paychecks. Still, these broader employment measures remain near their post-recession bests, and wages are moving in the right direction.

Blue-collar sectors led January job growth: solid month, yet again, for mining and construction.

Manufacturing employment growing at same rate as U.S. overall, after lagging in 2015 and 2016.

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