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January Jobs: Labor Market Continues on Its Healthy Path

February 2, 2018
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Guest blog by Dr. Tom Cunningham, Economist and MST Advisory Services, Senior Advisor- Economics

The Bureau of Labor Statistics January employment report released this morning can be best characterized as “more of the same.” It shows a U.S. labor market continuing on its existing, mainly positive path. 

The report shows 200,000 jobs were created in January, slightly above the 180,000 expected. The revision to the previous month’s report was negative, but insignificantly. Sectors with notable gains were construction, food service, healthcare and manufacturing. Other sectors were essentially unchanged. 

The headline unemployment rate (U3) remained unchanged at 4.1 percent. The broader measure of labor underutilization (U6), individuals not formally included in the narrow definition of “unemployed” but available for full-time work, ticked up 0.1 to 8.2 percent. 

The most notable aspect of the report relates to earnings. While hourly earnings have increased 2.9 percent year-over-year, continuing the recent trend, the increase in January was less than the increase in December. What is noteworthy is that a number of states increased the minimum wage at the turn of the year, so a boost in the hourly earnings measure was expected. 

In sum, today’s report should not alter anyone’s view of the state of the labor market. We continue on a healthy path.


About the Author

Tom Cunningham holds a Ph.D. in economics from Columbia University and was senior economist with the Federal Reserve Bank of Atlanta from 1985 to 2015. Mr. Cunningham serves as a consultant to MST in the creation and ongoing development of the MST Virtual Economist and is the MST Advisory economics specialist

Why should lenders consider the monthly jobs report?

As employment is a key factor in projecting loan portfolio performance, current employment statistics and longer term trends are likely to be primary considerations for most banks and credit unions as they incorporate forward-looking economic factors in their ALLL estimations under the CECL accounting standard. 

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