US hiring accelerates in January
WASHINGTON (Reuters) – US job growth surged in January and wages increased further, recording their largest annual gain in more than 8-1/2 years, bolstering expectations that inflation will push higher this year as the labor market hits full employment.
Nonfarm payrolls jumped by 200,000 jobs last month after rising 160,000 in December, the Labor Department said on Friday.
The unemployment rate was unchanged at a 17-year low of 4.1 percent. Average hourly earnings rose 0.3 percent in January to $26.74, building on December’s solid 0.4 percent gain.
That boosted the year-onyear increase in average hourly earnings to 2.9 percent, the largest rise since June 2009, from 2.7 percent in December. Workers, however, put in fewer hours last month likely because of bitterly cold weather.
The average workweek fell to 34.3 hours, the shortest in four months, from 34.5 hours in December.
The robust employment report underscored the strong momentum in the economy, raising the possibility that the Federal Reserve could be a bit more aggressive in raising interest rates this year. The US central bank has forecast three rate increases this year after raising borrowing costs three times in 2017.
“The acceleration in average hourly earnings growth punches a hole in the narrative that wage growth remains lackluster,” said Scott Anderson, chief economist at Bank of the West in San Francisco. “The Goldilocks view of inflation is being sorely challenged right now.”
Fed officials on Wednesday expressed optimism that inflation will rise toward the central bank’s target this year. Policymakers, who voted to keep interest rates unchanged, described the labor market as having “continued to strengthen,” and economic activity as “rising at a solid rate.”
US financial markets have priced in a rate hike in March. Prices for US Treasuries fell, with the yield on the benchmark 10-year note hitting a four-year high as investors worried about high inflation.