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Rise in factory, oil payrolls would be good sign

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The January employment report, out next Friday, is expected to record a solid 170,000 or so job gains, below monthly averages of 180,000 last year and 229,000 in 2015. The unemployment rate is expected to hold steady at 4.7%, close to its nine-year low.

Payroll gains are slowing as falling unemployment provides firms a smaller pool of available workers. But the increases are still more than enough to bring down the jobless rate.

Two sectors, however, are worth watching: manufacturing and mining and logging.

The latter, which includes oil and gas extraction, has seen falling payrolls since 2014 as tumbling oil prices discouraged drilling activity. But crude mounted a partial rebound in 2016, coaxing producers to revive shuttered wells and temper layoffs. Mining and logging employment has been rouhly stable since June.

Manufacturers, meanwhile, are linked closely to the oil industry. The resuscitation of drilling means producers are again ordering steel pipes and other equipment. Manufacturing employment increased by 17,000 in December after declining fairly steadily since mid-2015.

Further gains in payrolls for factories, and possibly even oil producers, would be a positive sign for the labor market this year. While oil and manufacturing payrolls make up just 9% of total employment, growth in those sectors can have an outsized ripple effect on the broader service sector.

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