Feb. 3, 2006 — -- American companies added 193,000 new workers to their payrolls last month, according to a report from the Labor Department.
This is lower than the expected 245,000, but the disappointment was offset by a surprising 0.2 percent dip in the nation's unemployment rate, which now stands at 4.7 percent, the lowest since July 2001. Economists were expecting the rate to remain steady.
The previous two months saw upward revisions, which added 81,000 additional jobs to the picture.
Because of the upward revisions in recent months, the markets and analysts are going to see today's report as in line with expectations. There's not going to be a lot of moaning here.
January outpaced the 12-month average job growth of 174,000 and is well above the level needed to keep pace with a growing population of workers in the United States. Most economists believe the United States needs to add at least 150,000 jobs a month to keep up with young people joining the work force.
What's interesting here is the measure of average hourly earnings -- showing a year-over-year jump of 3.3 percent in what Americans take home for their jobs. The stock markets will see this as a bad thing.
Why? It's a statistic the Federal Reserve uses to gauge inflation, and it is high by historical standards. It almost guarantees that we'll see another rate hike in March and beyond, which makes stocks less attractive investments when compared to less risky CDs and money market accounts. Expect a down day in the stock markets.
The construction industry continues to boom -- adding about 46,000 workers in January. Health care was another bright spot with 38,000 new positions. The nation's restaurants and bars added workers at a quick pace with 31,000 Americans starting a new job in the industry.
The retail business did not fare as well, with more than 13,000 people getting cut from the nation's clothing and accessory stores. Oddly enough, accounting and bookkeeping firms let go of more than 17,000 workers, and right before tax time!
The jobs reports is always important. It is arguably one of the best economic indicators out there -- and it's easy to understand.
Definition: The nonfarm payrolls number is a measure of the number of new jobs created by the private sector during the month. It is based on a survey of about 160,000 businesses and government agencies. The national unemployment rate comes from a separate survey of households.