Strong U.S. job, wage gains open door to mid-year rate hike

Fri Feb 6, 2015 4:32pm EST
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By Lucia Mutikani

WASHINGTON (Reuters) - U.S. job growth rose solidly in January and wages rebounded, a show of economic strength that put a mid-year interest rate increase from the Federal Reserve back on the table.

Nonfarm payrolls increased 257,000 last month, the Labor Department said on Friday, outstripping Wall Street forecasts.

At the same time, data for November and December was revised to show a whopping 147,000 more jobs created than previously reported, bolstering views consumers will have enough muscle to carry the economy through rough global seas.

"A mid-year lift-off in the interest rate is fait accompli ... there was good news on many fronts," said Sung Won Sohn, an economics professor at California State University Channel Islands in Camarillo.

At 423,000, November's gain was the largest for any month since May 2010, when employment was boosted by government hiring for a national census. Over the past three months, more than one million jobs have been created, the first time that milestone has been reached since late 1997.

The unemployment rate rose one-tenth of a percentage point to 5.7 percent, but that was because Americans poured into the labor force to hunt for work in a show of increased confidence.

The dollar rallied against a basket of currencies and prices for U.S. Treasury debt fell as investors brought forward bets on a rate hike. U.S. stocks ended lower amid concerns over Greece's debt negotiations.

Rate futures shifted to show traders now expect a rate increase in September. Before the report, they were anticipating an October hike. Some top Fed officials have been pointing to a June policy tightening.   Continued...

People enter the Nassau County Mega Job Fair at Nassau Veterans Memorial Coliseum in Uniondale, New York October 7, 2014. U.S. job openings rose to their highest level in more than 13 years in August even as hiring fell, the U.S. Department of Labor said. REUTERS/Shannon Stapleton (UNITED STATES - Tags: BUSINESS EMPLOYMENT) - RTR49AUA