Wages up by most in eight years as U.S. adds jobs

U.S. employers added a robust 200,000 jobs in January, and wages rose at the fastest pace in more than eight years, encouraging trends that suggest that the economy may accelerate this year.

Unemployment remained 4.1 per cent, the lowest level since 2000, the Labor Department said in its monthly jobs report Friday.

The pay gains show that employers are increasingly competing for a narrower pool of workers with the U.S. expansion now in its ninth year. Raises stemming from Republican tax cuts and minimum wage increases in 18 states also likely boosted pay last month. The figures point to an economy on strong footing, fuelled by consumer spending and global growth.

“Labour is becoming scarce, and employers have to work to find, retain and train employees,” Diane Swonk, chief economist at Grant Thornton, said.

The pickup in wages could make it likelier that the Federal Reserve will raise short-term interest rates more quickly in coming months.

In January, average hourly pay rose nine cents to US $26.74 after an even bigger increase in December.

Weak wage growth has been one of the economy’s most persistent shortcomings for nearly a decade. But with fewer workers to hire, some employers are being forced to raise pay.

Many economists credit the Fed’ s low-rate policies under Chair Janet Y ellen with stimulating enough growth to bolster hiring and wages. Yellen’s final day at the Fed is Friday, and next week she will join the Brookings Institution. President Donald Trump chose not to offer her a second term and instead named Jerome Powell, a former investment banker and Fed governor, to be chairman of the central bank.