US hiring accelerates; annual wage growth strongest since 2009

Washington Reuters: US job growth surged in January and wages increased further, recording their largest annual gain in more than 8-1/2 years, bolstering expectations that inflation will push higher this year as the labour market hits full employment.

Nonfarm payrolls jumped by 200,000 jobs last month after rising 160,000 in December, the Labor Department said on Friday.

The unemployment rate was unchanged at a 17-year low of 4.1%. Average hourly earnings rose 0.3% in January to $ 26.74, building on December’s solid 0.4% gain.

That boosted the year-on-year increase in average hourly earnings to 2.9%, the largest rise since June 2009, from 2.7% in December. Workers, however, put in fewer hours last month likely because of bitterly cold weather.

The average workweek fell to 34.3 hours, the shortest in four months, from 34.5 hours in December.

The robust employment report underscored the strong momentum in the economy, raising the possibility that the Federal Reserve could be a bit more aggressive in raising interest rates this year. The U.S. central bank has forecast three rate increases this year after raising borrowing costs three times in 2017.

“The acceleration in average hourly earnings growth punches a hole in the narrative that wage growth remains lacklustre,” said Scott Anderson, chief economist at Bank of the West in San Francisco. “The Goldilocks view of inflation is being sorely challenged right now.”