Job Market Looking Up for Employees; Economic Consequences Mixed

Good economic news often seems to be bad news on Wall Street. As reported by the Washington Post, last month’s good unemployment and employment stats, while obviously good news for jobhunters, may be bad news for financial markets and long-term economic growth.

First, the news:

The nation’s unemployment rate fell to 4.7 percent in January, the lowest since mid-2001.
Non-farm payrolls showed an increase of 193,000 workers.
Corrections showed the economy had created about 81,000 more jobs in November and December than previously reported.
January’s job gains were spread across a broad range of industries and demographic groups. Construction employment rose by 46,000, helped by unusually warm weather. Factories added 7,000 jobs, the education and health sector added 39,000, and leisure and hospitality added 26,000.
Another positive sign for workers is the steady drop over the past year in the time a typical unemployed person goes without a job.

See Washington Post: “Jobless Rate Drops To 4.7%”

So what’s not to like?

Workers’ average hourly earnings rose 7 cents, to $16.41 an hour, which came on top of a 6-cent increase in December.

Good news, right?

Yes, but . . .

The Fed . . . now has a more compelling reason for further tightening moves at its meetings in late March and possibly thereafter. Higher interest rates would dampen growth and thereby reduce the danger that growing demand for workers might intensify inflationary pressures.
“This was a very solid report, but no good news goes uncriticized,” said Joel L. Naroff, president of an economic advisory firm that bears his name, in an analysis sent to clients. “On the one hand, workers’ income is finally starting to increase, and that bodes well for spending. On the other hand, labor costs are on the rise, and that implies potentially higher inflation.”

(For a comic take on this, see “Low Jobless Rate Leaves Workers Too Tired to Shop”)

Also supporting this view of an improving market for jobseekers is the Monster Employment Index, under which:

Nearly all industries in all nine Census Bureau regions registered higher levels of online job availability last month, with the West South Central region again posting the largest gain due to continued hurricane reconstruction efforts.
Demand was high for business and financial workers, information technology, legal, and office and administrative support.

Online job posting were also higher in the areas of food services, transportation and warehousing industries.

“Online recruiting pushes Monster index to new high”

Meanwhile, 64 percent of employed adults polled by Spherion Corp. said they believe the economy is improving or remaining stable, and a whopping 36 percent said they plan to change jobs in the next year. Of those, nearly half were between the ages of 18 and 34.

“Spherion: Workers see better job market”