US starts year with strong job surge

Job seekers at a recent job fair in Los Angeles. Last month's payroll rise was helped by hiring in construction, retail, finance and professional services. But analysts expect hiring to cool as the economy nears full employment.
Job seekers at a recent job fair in Los Angeles. Last month's payroll rise was helped by hiring in construction, retail, finance and professional services. But analysts expect hiring to cool as the economy nears full employment.PHOTO: BLOOMBERG

WASHINGTON • United States employers added the most workers in four months while wage growth slowed more than projected, suggesting there is still some slack left in the labour market.

Last month's 227,000 increase in payrolls followed a 157,000 rise in December and beat market expectations, a Labour Department report showed yesterday. The median forecast in a Bloomberg survey of economists called for a 180,000 rise.

The jobless rate rose to 4.8 per cent, and average hourly earnings grew 2.5 per cent from January last year, the weakest since August.

The data, representing the final figures under former president Barack Obama, indicate the job market is still enjoying steady growth though it is not tight enough yet to result in a bonanza for worker pay.

While analysts expect hiring to cool as the economy nears full employment, President Donald Trump has pledged to bring people back into the workforce and boost wages further through tax cuts, infrastructure investment and looser regulation.

"We haven't really seen that significant acceleration in wage growth that we would anticipate, given how close we are to full employment," Mr Ryan Sweet, an economist at Moody's Analytics said before the report. "It's just going to take a little bit more time."

Federal Reserve policymakers, who left interest rates unchanged on Wednesday, said in their post-meeting statement that there is room for improvement in the job market.

Last month's results were helped by hiring in construction, retail, finance and professional services. The 36,000 increase in construction payrolls was the largest since March last year.

Revisions to the previous two months subtracted a total of 39,000 jobs from payrolls. November's gain was cut to 164,000 from 204,000, while December's change rose by 1,000 to 157,000.

The unemployment rate, which is derived from a separate Labour Department survey of households, increased from the previous month's 4.7 per cent, where it was projected to hold in January.

The participation rate, which shows the share of working-age people in the labour force, increased to a four-month high of 62.9 per cent from 62.7 per cent. It has been hovering close to the lowest level in more than three decades.

For all of last year, 2.24 million jobs were created, more than the previous estimate of 2.16 million.

Private employment, which excludes government agencies, rose by 237,000 last month after a 165,000 increase the prior month.

Government employment fell by 10,000, with state and local agencies subtracting 14,000 and federal payrolls adding 4,000.

BLOOMBERG

A version of this article appeared in the print edition of The Straits Times on February 04, 2017, with the headline 'US starts year with strong job surge'. Print Edition | Subscribe