U.S. Gained 200,000 Jobs in January as Wages Picked Up

02/02/18 08:45 AM EST
   By Ben Leubsdorf and Eric Morath 

WASHINGTON--U.S. hiring was solid in January as the unemployment rate hovered at its lowest level in 17 years and wage growth picked up to its strongest pace since the recession.

Nonfarm payrolls rose a seasonally adjusted 200,000 in January, the Labor Department said Friday. The unemployment rate held steady at 4.1%, its lowest level since December 2000, for the fourth straight month.

Wage growth accelerated, with average hourly earnings for private-sector workers climbing 0.34% on the month and up 2.9% over the past year. That was the strongest year-over-year gain since June 2009, a sign the tightening labor market may be finally producing notably larger pay raises.

At the same time, the average workweek shrank by 0.2 hour to 34.3 hours in January, holding down weekly paychecks.

Economists surveyed by The Wall Street Journal had expected 177,000 new jobs in January, an unemployment rate of 4.1% and a 0.2% monthly gain for hourly earnings.

Hiring was revised down by 24,000 for November and December. Job creation has averaged 192,000 over the past three months, a little above its average of 181,000 for 2017 as a whole.

It was the 88th consecutive month of job creation, the longest streak of continuous hiring on record and a testament to the durability of the economic expansion that began in mid-2009, even as the pace of overall growth has lagged historical levels.

In January, most industries added jobs, including a 196,000 gain for private payrolls and 4,000 new government positions.

The labor-force participation rate in January was steady at 62.7%.

Unemployment rates rose last month for men, Hispanics, blacks and Asians but fell for women, whites and workers lacking a high-school diploma.

A broader measure of unemployment and underemployment, which includes people working part-time jobs because they can't find full-time employment, ticked up to 8.2% in January.

Friday's report included several routine updates, including new population controls for the household survey estimates of unemployment and employment, and benchmark revisions to the establishment survey estimates for nonfarm payrolls. The latter update added 146,000 jobs to the level of nonfarm employment in March 2017, a relatively minor change. Some figures going back several years were subject to revision.

The Labor Department said the federal government's three-day shutdown in January disrupted some data collection for Friday's report but had "no discernible effects" on the key numbers in it.

The U.S. economy entered 2018 with healthy momentum after posting its best year of growth since 2014. Gross domestic product expanded 2.5% in the fourth quarter of 2017 compared with a year earlier, and many forecasters expect growth will be supported this year by solid consumer and business confidence, stronger conditions overseas and tax cuts at home. Six states boasted record-low unemployment rates in December.

Jason Patrick, who owns the Nashville, Tenn., office of Express Employment Professionals with his wife, said the tightening labor market means more workers are jumping to new jobs compared with recent years.

"When their current employers are not adjusting their current pay scale to reflect the realities of the market, then employees are looking to leave and search for better pay and benefits," he said.

Companies looking to retain workers are forced not only to raise wages but "also they are having to provide more training, more development for their people, better engagement with their employees," Mr. Patrick said. "They're really having to work to keep their talent."

Still, wage growth has for years remained stubbornly modest compared with past expansions. Among other factors, sluggish productivity gains can restrain firms' ability to increase pay, and demographic changes also might be depressing wage growth as higher-paid baby boomers retire.

Even so, low and falling unemployment could boost wages in the coming months, along with minimum-wage increases that took effect in more than a dozen states at the beginning of the year.

A number of large employers have recently announced one-time bonuses for their employees, with some crediting the recent tax-code overhaul. However, the Labor Department excludes irregular bonuses from the earnings data featured in Friday's employment report.

The Federal Reserve is watching for evidence of stronger price and wage pressures, which officials have said they expect will emerge in response to a tight labor market and continued economic growth.

Inflation has been sluggish in the wake of the 2007-09 recession, and the Fed has struggled to hit its 2% target for annual price growth. Prices rose 1.7% in December from a year earlier and so-called core prices, excluding the volatile categories of food and energy, were up 1.5% on the year, according to the Fed's preferred inflation gauge, the personal consumption expenditures price index produced by the Commerce Department.

The Fed's policy-setting committee said Wednesday in a statement that "the labor market has continued to strengthen," with low unemployment and solid hiring, and inflation was "expected to move up this year."

Investors and analysts widely expect the central bank will raise short-term interest rates at its next policy meeting in March.

The Labor Department's latest employment report can be accessed at: https://www.bls.gov/news.release/empsit.nr0.htm

Write to Ben Leubsdorf at ben.leubsdorf@wsj.com and Eric Morath at eric.morath@wsj.com


(END) Dow Jones Newswires

February 02, 2018 08:45 ET (13:45 GMT)

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