U.S. Sees Biggest Job Increase Since 2008
The U.S.Labor Department reported Friday that the United States economy added over 257,000 jobs in January, the largest increase since the start of the recession in November of 2008. The January job numbers represent the 11th continuous month that job growth was greater than 200,000, and revised figures for November indicate that over 400,000 jobs were created.
Surpasses Expectations The January figures surpassed the expectations of most economists, who had predicted that job growth would be more in the 230,000 range. The unexpectedly robust numbers are likely to raise confidence that the U.S. economy will experience healthy growth in 2015. Most of the growth was reported in the private sector, which has added nearly 12 million jobs over the past 59 months, the longest continuous stretch of private sector growth ever recorded.
Strong Growth The positive numbers indicate a level of unusual strength for the economy, with over a million jobs created in just the last three months. A similar level of growth has not been recorded since 1997. The eleven month streak of job increases over 200,000 is the longest since 1994.
Unemployment Rises Yet, despite the improving job growth figures, unemployment inched up from 5.6% to 5.7%. Many observers attributed the small increase to previously discouraged workers who had dropped out of the labor market resuming their job search due the improved economy. There was also a small increase in wage growth, with non-farm payrolls increasing at a rate of 12 cents per hour, more than erasing a 5 cent drop in December 2014.
Dollar Rising The Labor Department report caused an immediate reaction on world markets, with the U.S. dollar rising within minutes of the report’s release. Stock markets in the U.S. and around the world also responded positively. With many economies around the world still struggling to fully recover form the recession of 2008, much of the world is looking to the U.S. to lead the way to recovery with continued strong growth.
Federal Reserve One area of speculation following the Labor Department report is what effect it will have on the Federal Reserve, which has been signaling for months that it will raise interest rates provided the U.S. economy remains strong. Interest rates have been held near zero by the Federal Reserve since 2008, and markets remain uncertain about what effect rising interest rates in the U.S. will have.
Jeff Ramson is the CEO of PCG Advisory Group and an authority within the Investor Relations industry.