U6 Fix
February 7, 2025
Jobs Report Likely Leaves Fed With a “Wait-and-see” Approach
Job growth was weaker than expected in January as employers added 143,000 new hires to their payrolls. The three-month average increased to 237,000 during the month, boosted by upward revisions to data in November and December of 100,000 new jobs. The unemployment rate dipped to 4.0 percent from 4.1 percent in the prior month. Average hourly earnings rose 0.5 percent month to month for a 12-month gain of 4.1 percent. Notably, the Bureau of Labor Statistics stated that the Southern California wildfires and severe winter weather in much of the country had no discernible effect on the data. In January, the Federal Reserve kept rates steady and struck a slightly more hawkish tone that suggests a “wait-and-see” approach to further policy adjustments.
Employers added 143,000 new hires to their payrolls in January, according to the Bureau of Labor Statistics. Private-sector firms added 111,000 workers, a slower pace than the revised 273,000 in December. Government hiring remained steady as 32,000 new employees were added. Goods-producing industries did not add any jobs during the month after shedding 2,000 jobs in December. The construction sector added 4,000 workers while manufacturing added 3,000 new hires. The mining and logging industry shed 7,000 workers during the month. Service-providing industries hiring increased 111,000 as hiring in the health care and social services sector remained strong, adding 66,000 jobs. Leisure and hospitality shed 3,000 positions during the month. Hiring in retail trade held steady, adding 34,300 jobs. The pace of hiring in transportation and warehousing downshifted as employers added 1,100 workers after 21,500 in the prior month. The temporary help services sector cut 12,400 positions. Data for November was revised up by 49,000 and the change for December was revised higher by 51,000. Combined, employment gains were 100,000 higher than previously reported.
The unemployment rate ticked lower to 4.0 percent in January from 4.1 percent in December. The labor force participation rate ticked up to 62.6 percent.
Gains in average hourly earnings increased 17 cents in January – a 0.5-percent monthly increase. It was the quickest month-to-month gain since August 2024. Over the past 12 months, average hourly earnings increased by 4.1 percent. Average hourly earnings for production and non-supervisory workers increased by 16 cents, which was a 0.5-percent monthly gain, an increase from the 0.3-percent monthly rise in December and the fastest pace since March 2023.
Data junkies, here’s your fix: The January U-6 (the broadest measure of unemployment) held steady at 7.5 percent.
