Nice jobs report, but don't stop worrying

The latest jobs report suggests that the U.S. economy entered 2016 with adequate momentum. It shouldn’t be taken as a sign, though, that worries about a slowdown are overblown.

Employers added an estimated 151,000 jobs in January — less than expected, but more than enough to reduce the unemployment rate, which declined 0.1 percentage point to 4.9 percent, matching an eight-year low. Perhaps most important, workers saw some significant raises: Average hourly earnings rose 12 cents to $25.39, up 2.5 percent from a year earlier. All this indicates an economy operating close to full potential, the point at which inflation pressures tend to build.

The report, however, gives only a partial picture. It doesn’t fully reflect recent setbacks: January’s stock-market rout, rising corporate borrowing costs and increasing concerns about China and other emerging markets.

The employment data refer to the pay period that included the second full week of the month — a point at which many employers wouldn’t yet have had a chance to react to the market turmoil. And tighter financial conditions can take quite a while to translate into slower hiring.

Elsewhere, there’s evidence of remaining slack in the labor market. An unusually large number of people are stuck in part-time jobs or not actively seeking work at the moment — leaving a pool of more than 1 million from which employers could potentially draw.

And although the increase in wages is encouraging, it falls short of the 3.4-percent pace that prevailed over the two decades before the 2008 recession. Raises have been skewed somewhat toward sectors such as finance and information (a category that includes publishing and telecommunications), which together accounted for more than a quarter of total wage gains in the three months through January. Here’s a breakdown by industry:

In short, the U.S. economy has kept making steady progress toward healing the damage done by the 2008 financial crisis and recession. But it isn’t there yet, and how it will handle new threats remains to be seen.