Manufacturing Employment Holds Firm in January Jobs Report

US employers added a solid 257,000 jobs in January, with the manufacturing sector similarly remaining firm with job gains of 22,000, the Labor Department reported on Feb. 6.

The headline number topped economists' January forecasts of 234,000 new jobs, though January employment growth cooled significantly from torrid gains in November and December.

Meanwhile, the national unemployment rate ticked up from 5.6% to 5.7%. Other key economic indicators in the latest round of figures released by the government also show that the US economy had slowed into the beginning of this year.

Manufacturing's addition of 22,000 jobs last month was slightly less than the 26,000 the sector added in December. Most of the January job additions came from durable goods industries, with 18,000, led by the auto industry with 6,700 and machinery manufacturing with 3,200. Food manufacturing added 6,000, and computers and electronic products added 2,300.

The manufacturing workweek edged up by 0.1 hour to 41 hours, and factory overtime edged down by 0.1 hour to 3.5 hours.

The construction sector added 39,000 positions, with heavy and civil engineering construction growing by nearly 6,000 jobs, while the mining and logging sector shed 3,000 jobs.

The Labor Department released significantly higher revisions to its job counts for November and December. November was changed from 353,000 to 423,000, the highest monthly gain in 17 years. December gains were recalculated from 252,000 to 329,000. January, therefore, dipped below 300,000 for the first time in at least three months.

But January's jobs report is being seen as a positive sign, especially as average hourly earnings rose 12 cents - the biggest increase in six years -- after declining 5 cents in December. Slow wage growth was one of the few key constraints on the nation's economy from expanding further last year in an otherwise strong 2014 for the labor market. The dearth in pay raises dampened consumer spending for most of the year, and expenditures experienced the biggest drop in five years in December, when it fell 0.3%.

Still, economists are expecting that with a tightening labor market, wages will rise more quickly this year. And combined with low gas prices, Americans should have plenty of cash in their pockets for discretionary spending, analysts say. Consumer spending is the biggest driver of the US economy, accounting for 70% of activity.

The economy still faces tough headwinds, as tepidness among key trade partners and a strong dollar are hurting US exports and driving Americans to buy foreign goods. The US trade deficit ballooned by nearly $7 billion in December to $46.6 billion, the widest gap since November 2012. Demand for US goods and services overseas declined by $1.5 billion, while imports grew by $5.3 billion.

A bright spot in the Commerce Department's December international trade report was capital goods exports, which expanded by $854 million. Exports of semiconductors, telecom equipment, industrial engines, civilian aircraft and material handling equipment led the way. Exports of automotive vehicles, parts and engines also grew, by $370 million.

With the US economy faring better than the rest of the world, domestic growth will be counted on in the near term. The nation's GDP is forecast to expand at least 3% this year, ahead of 2014's current estimate of 2.4%. The Commerce Department released its initial fourth-quarter estimate of 2.8% last week.

But the department's separate US factory orders report for December showed a 3.4% drop versus the month before, as orders for machinery fell 3.7% and durable goods orders fell again for the fourth time in five months.

The Institute for Supply Management's manufacturing index for January measured its slowest gain in a year, as well. Growth decelerated from December's 55.1% rating to 53.5%, dragged down by softer domestic business growth and a contraction in export orders. ISM's manufacturing employment index mirrored the slight decrease in growth recorded by the Commerce Department's jobs report.

The crash in oil prices is seen as a mixed sign. It should leave Americans with more disposable cash by saving at the pump, but it is expected to hamper capital expenditures and investments - hence new equipment orders -- by energy companies. Manufacturing analysts have commented that the sector could slow this year and even become volatile as it reacts to economic conditions.

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Will Ng is a perfectionist who has been in business journalism for more than 15 years, many of which have been devoted to covering manufacturing, technology, and industry. A writer first, he loves to tell a good story and enjoys reporting on market trends and news.