The job market showed a strong start to 2015, with the economy adding 257,000 jobs in January (after adding a revised 423,000 in November and 329,000 in December), while average hourly earnings posted the biggest jump in six years. The job gains were across the board, with retail adding 46,000 jobs, construction companies hiring 39,000 and health-care providers hiring 38,000. The jobless rate edged up to 5.7%, largely because almost 1.1 million people entered the workforce. The economy has now added at least 200,000 jobs for 12 straight months.
While incomes rose in December, consumer spending logged its biggest decline since September 2009. Spending dropped .3% as consumers used the extra cash from cheap gas to boost their savings and pay down debt. Americans cut back their spending on most goods and services, including groceries, clothing, utilities and home furnishings.
Manufacturing slowed in January, as the ISM manufacturing index slipped to 53.5% – its worst reading in a year. Components measuring production, employment and new orders fell, while new export orders dropped 2.5 points, marking the first drop after 25 months of gains.
The service sector grew at a slightly faster pace in January, but companies scaled back their hiring plans. The ISM non-manufacturing index ticked up to 56.7%, while the employment gauge fell 4.1 points to 51.6% – the lowest in 11 months.
The US trade deficit jumped 17.1% in December, reaching $46.6 billion – the biggest gap since November 2012 – due in part to increased petroleum imports along with a decline in exports of oil and oil-related products. Exports slipped to $194.9 billion while imports rose 2.2% to $241.4 billion. For all of 2014, the trade deficit amounted to $505 billion, up from $476.4 billion in 2013.
Source: Department of Commerce
Also on a downbeat note, non-farm productivity reversed sharply in the fourth quarter, dropping at a 1.8% annual rate after rising 3.7% in the third quarter. For 2014, productivity increased .8%.