Post Holidays, Labor Market Remains Buoyant

Comment on U.S. Bureau of Labor Statistics Employment Situation Report by Gad Levanon, Managing Director, Economic Outlook & Labor Markets, The Conference Board

News provided by

The Conference Board

Feb 06, 2015, 09:35 ET

NEW YORK, Feb. 6, 2015 /PRNewswire/ -- The economy generated 257,000 new jobs in January, and gains in the previous two months were revised up significantly. With both GDP and consumption growing at 4 percent in the second half of 2014, it is no surprise that employers continue to rapidly expand their payrolls.

Given the strong employment growth, the uptick in the unemployment rate is mostly noise in the data, which will be followed by rapid declines in the months ahead. The recovery in the average hourly earnings in January aligns it better with the Employment Cost Index, released last week, which shows modest acceleration in wages. As the labor market continues to tighten, we expect to see acceleration in wage growth in 2015.

What is surprising is that other data from the Bureau of Labor Statistics suggest ongoing weakness in labor productivity, which remained flat during 2014, in the non-farm business sector, and is likely to be negative in the first quarter of 2015.

The tightening of the labor market and the weak productivity growth are likely to put downward pressure on corporate profits that are already taking a hit from the strengthening of the dollar.

About The Conference Board
The Conference Board is a global, independent business membership and research association working in the public interest. Our mission is unique: To provide the world's leading organizations with the practical knowledge they need to improve their performance and better serve society. The Conference Board is a non-advocacy, not-for-profit entity holding 501 (c) (3) tax-exempt status in the United States. www.conference-board.org

Follow The Conference Board
Twitter | Facebook | LinkedIn

SOURCE The Conference Board