Consider looking past January’s so-so job growth.
At first glance, The Associated Press reports, today’s government report on U.S. hiring was a downer—151,000 added jobs, well below the pace of the previous few months.
Yet once you take a fuller view, a brighter picture of the job market emerges: A sub-5% unemployment rate. Healthy pay raises. And a stream of people who grew confident enough in the job market to start looking for work.
“The January report is a solid report in disguise,” says Douglas Holtz-Eakin, a former director of the Congressional Budget Office and president of the conservative American Action Forum.
That seems especially true given that the job gains come at a delicate time for the U.S. economy. Analysts have warned that the economy faces a growing risk of another recession within a year or two after having recovered only gradually from the Great Recession. Economic weakness overseas and reeling financial markets have slowed growth and squeezed manufacturers.
Still, last month’s pay raises and the addition of retail jobs suggest that consumers have the resilience to bolster growth. Average hourly wages have jumped 2.5% over the past 12 months, evidence that years of steady job growth are finally helping generate pay raises for more Americans.
“The wage numbers were the most encouraging bit of news all around,” says Carl Tannenbaum, chief economist at Northern Trust.
Tannenbaum says the figures gave him “extra comfort that the expansion wasn’t sliding toward an untimely conclusion.”
With the unemployment rate now 4.9%—its lowest level since 2008—many workers have managed to gain raises because their employers have had to offer better incentives to compete for talent. The unemployment rate dipped in January even though a sizable 502,000 more people began hunting for jobs.
