Comment on U.S. Bureau of Labor Statistics Employment Situation Report

Kathy Bostjancic, Director of Macroeconomic Analysis, The Conference Board

With a gain of 157,000 jobs in January, the employment situation continues to improve despite slow economic growth. The good news is that January’s employment gains, coupled with large revisions to the prior months, may translate into more consumer spending power, which helps offset some of the negative drag on after-tax income from the expiration of the temporary payroll tax cut. The bad news is that unemployment remains stubbornly high. Moreover, this job gain probably reflects still low productivity growth in the first quarter of 2013. Combined with some modest rise in labor costs, it means business profitability is narrowing somewhat. Still, business has long wondered when demand would improve enough to warrant adding to staffing levels. The January job gain may represent that tipping point.