US Employment Growth Expected to Slow Down
The US employment growth is likely to have cooled down in January, but the jobless rate is expected to remain at a near three-year low, indicating a recent improvement in the labor market. Nonfarm payrolls are estimated to have risen by 150,000, a decrease from the 200,000 jobs added in December.
Unemployment Rate Remains Steady
The unemployment rate is expected to hold steady at 8.5 percent, which is the lowest level since February 2009. This rate has declined by 0.6 percentage point over the past five months. Economists believe that the underlying details of the report will show an improvement in the labor market, despite the slower employment growth.
Factors Affecting Employment Growth
The loss of 42,000 courier jobs hired in December for the holiday season is expected to have restrained payroll growth in January. However, outside of transportation and warehousing, the report is expected to show gains in construction and manufacturing, as well as an increase in average hourly wages.
Impact on US Economic Growth
The employment report will be closely watched for signs of whether the anticipated slowdown in US economic growth in the first quarter is affecting companies’ hiring decisions. The sluggish labor market was one of the key factors that prompted the US Federal Reserve to keep interest rates near zero until 2014.
Quantitative Easing
The report may also influence the chances of the Federal Reserve implementing a third round of quantitative easing (QE3). If the report is disappointing, it could raise questions about the significance of recent improvements in economic activity.
Jobs Deficit
Employment in the private sector is expected to have risen by 170,000, while government payrolls likely fell by 20,000 due to tight budgets. The US economy still has a huge jobs deficit, with employment about 6.1 million below its pre-recession level.
Signs of Improvement
Despite the slower employment growth, there are signs of improvement in the labor market. The unemployment rate has declined for four straight months, and a broad measure of unemployment has dropped to an almost three-year low. Auto sales were buoyant in January, factory activity was at a seven-month high, and new jobless claims fell throughout the month.
Conclusion
In conclusion, while the US employment growth is expected to have slowed down in January, the jobless rate is likely to remain at a near three-year low. The report will provide valuable insights into the state of the labor market and its impact on US economic growth. Despite the challenges, there are signs of improvement, and economists remain cautiously optimistic about the future of the labor market.
