WASHINGTON, D.C.: US employers kept their doors wide open for new hires in January, capping a three-month surge that saw a stunning one million jobs created across the country.
A better-than-expected January total of 257,000 net new jobs made for the best hiring over three months since 1997, with a broad range of industries expanding payrolls despite the mid-winter economic slowdown.
The Labor Department’s January employment report released Friday also showed a modest gain in wages, and while the unemployment rate edged up to 5.7 percent from 5.6 percent, analysts said that related more to a jump in returnees to the labor force — a positive sign.
With the economy marking the 11th straight month of 200,000-plus jobs added, “This was another incredibly strong employment report for the US,” said Harm Bandholz of UniCredit.
Most economists said the fresh data showed real signs of the economy gaining traction after a bumpy 2014 during which it grew a modest 2.4 percent.
US markets took the report as good news at first, but a bout of profit taking at the end of Friday’s session left the S&P 500 and the Dow Jones Industrial Average both down by 0.34 percent.
The dollar surged more than one percent to $1.1322 per euro and to 118.97 yen, and US Treasury bond yields rose sharply.
There were weaknesses in the numbers, to be sure: Most of the new jobs were still low-wage positions and the number of long-term unemployed rose.
Meanwhile, an increase in wages —a data point watched as a crucial sign of labor-market tightening —was still only slightly above the inflation trend.
After falling in December, hourly wages gained 12 cents, or 0.5 percent, to $24.75. Year-on-year the increase was 2.2 percent.
While the rise was encouraging, economists said the wage movements over the past year were still too inconsistent to declare that American workers’ paychecks are firmly on the rise.
“The labor market is not yet tight enough to produce substantial wage growth, which means that future consumption growth will be limited,” said Dean Baker of the Center for Economic and Policy Research.
‘No signs of cooling’
Even so, said Chris Williamson of Markit, the Labor Department report was mostly good news.
“The US labor market showed no signs of cooling at the start of the year, despite recent evidence to suggest the economy moved down a gear during the winter months,” he said in a client note.
“Wage growth remains a major disappointment but is at least showing signs of picking up.”
The surge in job creation in the past year has sharply cut the US unemployment rate. The 5.7 percent rate at the end of January compared with 6.6 percent a year ago, and 8.0 percent at the start of 2013.
Analysts believe it will fall close to 5.0 percent by the end of this year, finally putting the deep damage of the 2008-2009 Great Recession behind.
Combined with the benefits of sharply lower fuel prices, “the gains in average hourly earnings will translate into significant buying power among consumers,” said Doug Handler, chief US economist at IHS Global Insight.
The January jobs market report was seen as strong enough to confirm the Federal Reserve’s march toward raising its near-zero interest rates in the middle of this year, if not earlier.
With inflation tame, Fed policy makers have been keeping their eyes on employment gains and especially wages in recent months to see if the economy is growing strongly enough to weather a tightening of monetary policy.
“With three-month average job growth of 336,000, the Fed may start thinking about liftoff before June,” said Chris Low of FTN Financial.