Lights and Shadows
By Isaac Cohen*
The last employment report, released by the US Labor Department, revealed job creation in January reached 151,000, less than last year’s monthly average of 228,000. Still, the unemployment rate decreased to 4.9 percent, from 5 percent, while hourly earnings for private sector workers, which have lagged behind throughout the economic recovery, increased 0.5 percent from December. From a year earlier, wages increased 2.5 percent, together with a slight increase from 62.6 percent in December to 62.7 in January, in the rate of participation in the labor force, or the share of the population that is working or looking for work.
Therefore, despite the lesser figure of monthly job creation in January, the improvement in wages and in labor force participation indicated the labor market may be tightening. This contrasted with the moderate economic growth of 0.7 percent, during the last quarter of 2015 and with concerns about the slowdown in the world economy, particularly in China, the strong dollar and stock marhet volatility.
The question is how these mixed signals will influence the central bank posture on increasing the federal funds interest rate. On March 4 another jobs report will be released, before the Federal Reserve’s Open Market Committee meeting of March 16-17.
*International analyst and consultant. Commentator on economic and financial issues for CNN en Español TV and radio. Former Director, UNECLAC.