US job growth up but wages slip

The US economy added 242,000 jobs last month. The jobless rate held at 4.9 per cent as people entered the labour force and found work. But average hourly earnings fell by 0.1 per cent - the first monthly decline in over a year.
The US economy added 242,000 jobs last month. The jobless rate held at 4.9 per cent as people entered the labour force and found work. But average hourly earnings fell by 0.1 per cent - the first monthly decline in over a year.PHOTO: REUTERS

NEW YORK • United States employers added more workers last month than projected but wages unexpectedly declined, dashing hopes that reduced slack in the job market was starting to benefit all Americans.

The 242,000 gain followed a 172,000 rise in January that was larger than estimated, a Labour Department report showed yesterday.

The jobless rate held at 4.9 per cent as people entered the labour force and found work.

Average hourly earnings fell, the first monthly decline in over a year.

A job market in good health will reinforce job security and encourage Americans to spend, buffering the US from the ill effects of global economic weakness.

While employment is robust and will play a role in deciding the US presidential race, bigger wage gains are needed to help move inflation closer to the Federal Reserve's goal.

"Overall employment growth remains strong despite the global headwinds," High Frequency Economics chief US economist Jim O'Sullivan said before the report. "There is not a lot of slack left in the job market."

The median forecast in a Bloomberg survey called for a 195,000 advance. Estimates of 92 economists ranged from gains of 70,000 to 245,000. January was initially reported as a 151,000 increase.

Revisions to prior reports added a total of 30,000 jobs to payrolls in the previous two months.

The unemployment rate, which is derived from a separate Labour Department survey of households, was projected to hold at an eight-year low of 4.9 per cent, according to the survey median.

The labour market is coming off its best two years for job growth since 1998-1999.

While Democratic presidential candidate Hillary Clinton can point to economic progress under her party's leadership, Republican front runner Donald Trump may steer voters to focus on limited wage growth and firms moving operations overseas because of high corporate tax rates.

Average hourly earnings fell by 0.1 per cent from that in the prior month, the first decline since December 2014, Labour Department figures showed.

Worker pay rose 2.2 per cent over the 12 months to last month. Wage growth has been hovering just above 2 per cent year-over-year on average since the current expansion began in mid-2009.

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A version of this article appeared in the print edition of The Straits Times on March 05, 2016, with the headline 'US job growth up but wages slip'. Print Edition | Subscribe