U.S. employers ramped up hiring in January and wage gains rebounded, providing fresh evidence of a durable jobs market that backs the Federal Reserve’s decision to stop cutting interest rates and hands President Donald Trump an early election-year boost.
Payrolls increased by 225,000 after an upwardly revised 147,000 gain in December, according to a Labor Department data Friday that topped all estimates of economists. The jobless rate edged up to 3.6%, still near a half-century low, while average hourly earnings climbed 3.1% from a year earlier.
The dollar maintained gains, yields on the 10-year Treasury were lower and U.S. equity futures declined as investors remained focused on the potential economic fallout from the coronavirus that has now claimed more than 600 lives.
Annual revisions to historical data took some shine off one of Trump’s main bragging points, cutting the 2018 job gain to 2.31 million from 2.68 million. The 2017 and 2019 gains were about 2.1 million, meaning each year under Trump -- while still strong -- has been slightly slower than the 2.35 million rise in the final year of the Obama administration.
Despite the revisions, the report shows the economy has retained strength, which Trump has heralded as a key tenet of his re-election campaign and this week in his State of the Union address. The solid hiring defies expectations for a step down to a slower pace of job growth as businesses delay investment, and exceeded the 175,000 average monthly gain for 2019.
The pace also supports Fed policy makers’ view of the labor market as strong, and is more than sufficient to keep up with population growth. At the same time, Boeing Co.’s halt on production of the troubled 737 Max airplane and fears of the coronavirus spreading are likely to weigh on the U.S. economy in coming months.
Steady Number
Average hourly earnings rose 0.2% from the prior month, slightly less than estimated but an acceleration from the December reading.
Payroll gains were broad-based and topped the median estimate for 165,000. Education and health services employment added 72,000, while transportation and warehousing rose by the most in a year.
“This is a steady as she goes number,” Societe Generale U.S. Rates Strategy Head Subadra Rajappa said on Bloomberg Television. “Broadly speaking, this doesn’t really change the outlook on employment.”