Employers added 151,000 new jobs in January, weaker than most economists expected and the slowest pace of job creation since September.
Still, today’s report from the Labor Department isn’t terrible given the snail-like pace of the economy lately. Unemployment fell to 4.9 percent, its lowest in eight years, even as more people joined the labor force.
“It wasn’t a great report, but considering dawdling fourth-quarter growth, I’ll take it,” Redfin Chief Economist Nela Richardson said. “The problem going forward is that the cities that are adding good jobs aren’t adding housing, worsening affordability.”
Spotlight: Wages and Retail
Wages were up 2.5 percent from a year ago. That’s decent, but some of it is explained by new minimum-wage laws that took effect in January and big retailers surrendering to political pressure to raise hourly pay.
On Jan. 1, Wal-Mart upped starting pay from $9 to $10 an hour. Next month, the retail giant will give 1.2 million more employees a raise, pushing average hourly pay to $13.38 for full-time workers.
In all, lower-paying retail, fast food and restaurant jobs accounted for nearly 70 percent of January’s employment gains. And the surge in retail hiring–the biggest winner in January, with 58,000 jobs–might be a holiday overhang and short-lived, said Chris Low, chief economist at FTN Financial.
“Seasonal layoffs are increasingly delayed until February so stores can press sales on people who come in with exchanges and gift cards,” Low said. “Look for a big drop in retail next month.”
Upshot
More people are on the job or looking for work. Paychecks are getting bigger.
For the housing market, it’s decent news. Construction employment continues to expand, albeit slowly, and the growth in pay could be the start of a pickup that encourages more homeownership down the road. Today’s report doesn’t give clear direction to the Fed, but we expect mortgage rates to stay pretty low this year.
Wages certainly aren’t keeping up with higher home prices and builders aren’t keeping up with demand, but we’re making progress. It could be better, but it’s not bad.
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