Employment Figures Fit 'Soft Landing' Predictions

Slower Job Growth Balm for Inflation

The nation's labor market softened slightly last month, with the unemployment rate edging up to 4.6 percent as job growth slowed, the Labor Department said yesterday.

The report fits with widespread government and private forecasts that the economy will slow to a cooler but still-solid pace of growth this year after expanding rapidly last year. That is expected to cause the drum-tight job market to ease and inflation pressures to ebb.

The Labor Department's report "paints a perfect picture of the U.S. economy and labor markets making a 'soft-landing,' " said Stuart Hoffman, chief economist at PNC Financial Services Group.

The jobless rate ticked up in January from 4.5 percent in December but remains low by historical standards. Much of the increase occurred because hundreds of thousands of workers poured into the labor force last month, likely drawn by booming job growth at the end of last year.

Employers increased their payrolls by 206,000 workers in December and by 196,000 in November, the department said, revising upward earlier estimates. That was more than the monthly number of new jobs, 100,000 to 150,000, that many economists think necessary to keep pace with growth in the labor force.

Employers turned more cautious in January, however, adding a more modest 111,000 jobs, the Labor Department said. Some of the biggest employment gains were in education, health care, finance and other services, as was the case last year.

Construction employment grew as job cuts by home builders were more than offset by hiring for nonresidential projects such as offices, hotels, factories and hospitals. Some of the gain was likely because of the unseasonably warm weather across much of the country in January, analysts said.

Manufacturing employment fell, with the losses concentrated in automaking, furniture and textiles, the Labor Department said.

"The end of the year was strong, so it was not unusual there was a little pullback" in hiring last month, said Roy G. Krause, chief executive of Spherion, a national staffing firm in Fort Lauderdale, Fla.

Many economists predict that the unemployment rate will rise this year to about 5 percent.

The unemployment rate fell last month for African American workers, to 8 percent from 8.4 percent in December. The rate was the lowest since July 2001, but was still nearly double the rate for white workers, which rose to 4.1 percent from 4 percent. Latino joblessness rose to 5.7 percent from 4.9 percent.

Wage growth also slowed in January, which should help ease concerns at the Federal Reserve that a tight job market might drive inflation higher. Average hourly earnings for most workers rose 0.2 percent last month, the slowest pace since September, to $17.09.