January Employment Report Preview
The Bureau of Labor Statistics (BLS) of the U.S. Department of Labor will release its Employment Situation report for January 2015 on Friday, February 6, 2015. The market is expecting the economy to add 235,000 net new jobs in January 2015, following the 252,000 gain in December 2014, and for the unemployment rate to remain at 5.6%. Average hourly earnings — the best proxy for wages in this report — are expected to accelerate to 1.9% year over year, from the 1.7% year-over-year gain posted in December 2014.
JOB GROWTH IMPROVING, BUT WAGE INFLATION STILL BELOW “NORMAL”
In the 12 months ending in December 2014, the economy created 3 million jobs (246,000 per month) [Figure 1], making it the best calendar year for job creation since 1999. The unemployment rate dropped from 6.7% to 5.6% between December 2013 and December 2014, even as wage growth — measured by the year-over-year gain in average hourly earnings — decelerated from 1.9% in December 2013 to 1.7% in December 2014. Although the economy has now recouped all the jobs lost during the Great Recession [Figure 2], and the pace of job creation over the past year has now surpassed its pre-Great-Recession pace, the unemployment rate is still more than 2 full percentage points above its pre-Great-Recession low, and the pace of wage inflation remains well below the 3.5 – 4.0% seen prior to the onset of the Great Recession. That 3.5 – 4.0% range on wage inflation has been cited by Federal Reserve (Fed) officials as “normal.” Read Entire Article…