January added 227,000 jobs

Retail, construction lead hiring growth

The labor market began 2017 on a high note as U.S employers added 227,000 jobs in January, raising the prospect of solid hiring this year amid a burst of business confidence in the Trump administration.

The unemployment rate, which is calculated from a different survey, rose to 4.8% from 4.7%, the Labor Department said Friday.

“The increase in the unemployment rate came about from both more people working and more people looking for work — a positive,” said Gus Faucher, an economist at PNC.

Economists surveyed by Bloomberg expected 175,000 job gains.

Businesses added 227,000 jobs, driven by retail, construction and financial services. Federal, state and local governments lost 10,000.

On the downside, job gains for November and December were revised down by 39,000. November’s was revised to 164,000 from 204,000, and December’s to 157,000 from 156,000.

Average hourly wages rose a modest 3 cents to $26, moderating annual gains to 2.5% from 2.9% in December. Economists expected the 2.9% jump at least to hold after about 20 states raised their minimum wages last month. And the tight labor market is expected to juice wage growth as employers compete to attract fewer job candidates.

The disappointing pay increase could temper inflation and help persuade the Federal Reserve to wait until June to raise interest rates again despite January’s healthy job gain, said economist Andrew Hunter of Capital Economics. The Fed raised its benchmark rate in December for the first time in a year but gave no signal after a meeting this week that it’s poised to act again in the very near term.

Another area of concern was a rise of 242,000 in the number of part-time workers who prefer full-time jobs. That pushed up a broader measure of joblessness that includes those workers, the unemployed and and discouraged Americans on the sidelines to 9.4% from 9.2%.

Some analysts figured a positive snapback effect inflated payroll gains last month after Midwest snowstorms appeared to dampen hiring in December. Goldman Sachs estimated that bounce would add 20,000 to 40,000 jobs.

More broadly, many economists believe average monthly job growth will slow to about 160,000 this year from 180,000 last year and 220,000 in 2015.