Jobless rate falls to 4.9 percent, an 8-year low

Jobless rate falls to 4.9 percent, an 8-year low
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The U.S. economy added 151,000 jobs in January — well below the robust pace at the end of 2015, but placing the unemployment rate under 5 percent for the first time in nearly eight years.

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The unemployment rate ticked down to 4.9 percent from 5 percent, the lowest level since February 2008, the Labor Department reported on Friday.

Economists had expected between 185,000 and 200,000 jobs, so January’s numbers will add to fears about the strength of the economy in 2016.

Jason FurmanJason FurmanWhite House divide may derail needed China trade reform Trump picks top economic adviser The White House budget plan shortchanges our economic future MORE, chairman of the Council of Economic Advisers, said that while the pace of job gains was slower than in recent months, job creation is “well above the pace necessary to maintain a low and stable unemployment rate.”

Furman said that more jobs and wage gains are possible with President Obama's new proposal for investments in clean infrastructure, passing of the Trans-Pacific Partnership and raising the minimum wage.

Experts suggested looking beyond the jobs number to see that employers continue to hire despite turbulence roiling global financial markets.

Douglas Holtz-Eakin, an economist with the American Action Forum and former head of the Congressional Budget Office, said that the bottom line is that the "January report is a solid report in disguise."

"It is evidence that the financial turmoil has not spilled over to the real economy and it should give the Fed the room to continue to normalize interest rates," he said.

The Federal Reserve held interest rates steady last week amid growing concern about the stock market, which has been unsteady since the beginning of the year.

Chairwoman Janet Yellen said that the Fed would be “closely monitoring global economic and financial developments." The Fed raised interest rates for the first time in nearly a decade at its December meeting.

Beth Ann Bovino, U.S. chief economist at Standard & Poor's Ratings Services, said the January numbers "are about momentum."

“While 151,000 new jobs in January is below expectations and off pace from prior months, the data shows America's recovery is continuing,” Bovino said.

“Amid all the global economic turmoil and domestic market gyrations, positive job growth, the drop in the unemployment rate to 4.9 percent, and the uptick in wages show the U.S. is heading in the right direction.”

Bovino said the recent jobs data will give the Federal Reserve plenty to weigh at its next meeting, but the steady jobs data and a 2.5 percent year-over-year increase in wages supports more interest rate hikes this year.

Meanwhile, November's jobs numbers were revised up by 28,000 jobs to 280,000 while the December figures were revised down by 30,000 to 262,000.

In the final three months of last year, jobs growth averaged 279,000.

Over the first month of 2016, wage growth ticked up nearly 0.5 percent, a good sign in an expanding labor market that had struggled to boost workers' paychecks.

Employment increased in retail, restaurants, healthcare and manufacturing.

Sophia Koropeckyj, managing director at Moody’s Analytics, said that “January's disappointing top-line payroll number belies the fairly healthy and resilient employment situation.”

“Consumer industries such as retail, leisure/hospitality and financial services continued to expand in January, underscoring the resilience of U.S. consumer to global weakness and, so far, financial turmoil," Koropeckyj said. 

Manufacturing, which has been struggling for the past year amid a stronger dollar that makes exports more expensive overseas, added 29,000 jobs, much stronger than expected and the strongest since November 2014.

Chad Moutray, chief economist for the National Association of Manufacturers chief economist, said the latest manufacturing jobs data "provides a bit of encouragement for manufacturers that have been beleaguered by the global slowdown and pullbacks in the energy sector."

Retailers added 57,700 jobs, a surprise addition, and restaurants hired 47,000 workers in January.

Healthcare tacked on 37,000, with most of the increase occurring in hospitals. The industry has bulked up by 470,000 jobs over the past year.

Employment in financial activities rose 18,000 in January.

Private educational services and transportation and warehousing lost jobs.

Employment in temporary help services fell 25,200 last month, offsetting a similar-sized increase in December. Education services shed 38,500 workers after previous gains.

The transportation and warehousing sector let go of 20,300, the bulk of which are likely seasonal workers who were needed for the holidays.

And mining employment continued to decline amid falling oil prices, shedding 7,000 jobs last month.

Employment in the industry hit a peak in September 2014, falling 146,000, or 17 percent since then. 

The economy has added jobs for 71 straight months, the longest streak on record, and some economists are expecting that full employment will be reached by mid-year.

Employers added 2.65 million jobs last year, slower than 2014 but the second best year since 1999.

—Updated at 9:40 a.m. and 10:22 a.m.