The US economy posted solid job growth as it kicked off the new year.
The Bureau of Labor Statistics reported 227,000 jobs were added in January, a healthy boost from the 175,000 jobs expected by economists. It is an extension of a record streak of job creation with unemployment claims below 300,000 for 100 consecutive weeks, the longest stretch since 1970.
“Mining and construction led the gains. That’s great news for blue-collar workers who have struggled and are now under the political spotlight,” said Jed Kolko from Indeed.
“But mining and construction are two of the most cyclical industries, and these gains will be hard to sustain. Manufacturing jobs increased slightly but lagged the overall economy.”
At the same time, wages in January rose by just 2.5% year-over-year, weaker than the expected rate of 2.7%.
“The lack of wage growth suggests further room for tightening in the labor market,” said Curt Long, chief economist for the National Association of Federally Insured Credit Unions.
“So long as that remains true, and with inflation still below target, the Fed will be content to hold off on further interest rate hikes.”
Trump has historically been critical of the unemployment rate, saying it understates the actual level of joblessness. However, he was celebrating via Twitter today.
Meeting with biggest business leaders this morning. Good jobs are coming back to U.S., health care and tax bills are being crafted NOW!
— Donald J. Trump (@realDonaldTrump) February 3, 2017
According to the CME, expectations for a Fed interest rate hike have dropped with a March move now given just a nine percent chance from about 18 percent yesterday.
“The 227,000 rise in non-farm payrolls in January suggests that the labor market started the year on a reasonably solid footing. However, the drop back in annual wage growth is another reason to think the Fed will hold off raising interest rates until June,” said Andrew Hunter of Capital Economics.
The share of Americans who had a job or were looking for one in January was 62.9%, up from 62.7% in December. However, the labor-force participation rate is still near its lowest levels in decades.
The President’s Council of Economic Advisers says about half of the decline had come from structural, demographic factors, with baby boomers starting to retire.
“The US economy is riding a wave of bullish consumer sentiment right now, not uncommon following presidential elections in the past,” wrote Andrew Chamberlain, chief economist at Glassdoor.
“However, technically today’s BLS survey is for the pay period containing the 12th of the month, about a week before the Presidential inauguration. So it doesn’t likely reflect any actions since the Trump administration formally took office – something we’ll be watching for closely in the coming months.”
US markers are on the rise after the report’s release with financial companies also benefitting from the prospect of looser regulation if Donald Trump scraps the Dodd-Frank legislation.
The Dow Jones, S&P 500 and the Nasdaq all opened higher.