US employers kept their doors wide open for new job seekers in January despite a mid-winter slowdown in economic activity, a strong report by the Labor Department showed Friday.
Coupled with a modest gain in wages, the much better-than-expected report suggested the US labor market is beginning to tighten after years of slack, economists said.
The department reported that 257,000 net new jobs were generated last month, the 11th straight month of growth above the 200,000 level.
It also revised upward the already much stronger November and December numbers by a huge 147,000 jobs, taking the average for the three months to 336,000.
The unemployment rate edged up to 5.7 percent from 5.6 percent, which analysts downplayed as representing a change in the way the population data is calculated.
The jobless rate was nevertheless nearly one percentage point lower than a year ago, and is expected to continue falling this year.
– ‘No signs of cooling’ –
“The US labor market showed no signs of cooling at the start of the year, despite recent evidence to suggest the economy moved down a gear during the winter months,” said Chris Williamson of Markit.
Job gains were well-spread among industries, with construction, retail trade and health care the strongest.
After several months of small increases, governments shed 10,000 positions.
The number of unemployed, a volatile number from the Labor Department’s household survey, rose around 300,000 to 8.98 million, sending the headline jobless rate higher.
But data also showed a rise in participation in the active labor market, with the labor force growing by more than one million people in the month, according to the household survey.
The participation rate rose from 62.7 percent to 62.9 percent, though it remained far below the levels ahead of the deep 2008-2009 recession.
Wage growth, seen as a sign of whether the labor market is tightening, rebounded firmly after December’s drop: hourly wages gained 12 cents, or 0.5 percent, from December to $24.75.
Year-on-year the increase was 2.2 percent, only slightly above the inflation trend.
Economists said the wage movements over the past year were still too inconsistent to declare that workers’ pay is firmly on the rise.
Nevertheless, most said they expected the gains to add up over the coming months.
“We expect more acceleration in wages in the year ahead,” said Jim O’Sullivan of High Frequency Economics.
“The gains in average hourly earnings will translate into significant buying power among consumers in light of the recent decline in inflation,” added Doug Handler, chief US economist at IHS Global Insight.
For analysts, that serves to confirm expectations that the Federal Reserve will begin raising near-zero interest rates in the middle of this year, if not earlier.
With inflation tame, Fed policy makers have been keeping their eyes on employment gains and especially wages in recent months to see if the economy is growing strongly enough to weather a tightening of monetary policy.
“With three-month average job growth of 336,000, the Fed may start thinking about liftoff before June,” said Chris Low of FTN Financial.
US markets took the report as good news, with the S&P 500 adding 0.3 percent in early trade.
The dollar surged more than one percent against the euro, to $1.1333 per euro.