- Nariman Behravesh, chief economist at IHS
The US labour market started the year on a weaker footing, the Fed's comprehensive measure showed. The Labor Market Conditions Index dropped to 0.4 points in January after a revised 2.3 points in December, reaching the lowest reading since April 2015. The indicator averaged 1.9 points in all of last year, compared with 5.2 points in 2014. The January labour market report confirmed a slowdown in job creation after a rapid growth late in 2015 amid unusually warm weather. Rising wages and the unemployment rate at an eight-year low signalled the labour market recovery remains strong. Non-farm payrolls rose by 151,000 jobs last month, missing expectations for a 190,000 gain and following 292,000 new jobs created in December. Yet, it appeared to be enough to push the US jobless rate to 4.9%, down from 5.0%, the Labor Department reported. In January, all the employment gains were in the private sector, which added 158,000 jobs. The services sector dominated the payrolls increase last month, with 118,000 jobs created. In addition to that, average weekly earnings increased 12 cents an hour or 0.5% on a monthly basis, translating into a 2.5% annualized gain. Until recently, wage growth has been the one factor missing from America's recovery from the recession. As the unemployment rate remains low, many economists expect Americans to see paychecks increase. Fed Chair Janet Yellen is due to reveal a detailed assessment of economic trends this week when she delivers the semi-annual monetary policy report to Congress.
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