U.S. job growth accelerates in January, but wages lag

Fri Feb 3, 2017 4:33pm EST
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By Lucia Mutikani

WASHINGTON (Reuters) - U.S. job growth surged more than expected in January as construction firms and retailers ramped up hiring, but wages barely rose, handing the Trump administration both a head start and a challenge as it seeks to boost the economy.

Nonfarm payrolls increased by 227,000 jobs, the largest gain in four months, the Labor Department said on Friday. The unemployment rate, however, rose one-tenth of a percentage point to 4.8 percent and wages increased by only three cents, suggesting that there was still some slack in the labor market.

Still, the labor market is tightening and could hopefully soon spur faster wage growth. Federal Reserve officials view the jobs market as being at or near full employment.

U.S. government bond prices initially rose as traders focused on the disappointing wage growth, which investors saw as keeping the Fed on a gradual path of interest rate increases this year. In late trade, U.S. Treasuries were mostly flat while the dollar was little changed against a basket of currencies.

Stocks on Wall Street ended higher, with the S&P 500 index .SPX just shy of its record peak.

Economists polled by Reuters had forecast payrolls rising 175,000 last month and the unemployment rate unchanged at 4.7 percent. The economy created 39,000 fewer jobs in November and December than previously reported.

"While there's a great deal of anticipation surrounding steps that President Trump and the GOP-led Congress are expected to take to boost the economy, that's going to take more time," said Mark Hamrick, a senior economic analyst at Bankrate.com in Washington.

President Donald Trump vowed during last year's election campaign to deliver 4 percent annual gross domestic product growth, largely on the back of a plan to cut taxes, reduce regulations, increase infrastructure spending and renegotiate trade deals in the United States' favor.   Continued...

Job seekers break out to visit corporate employment personnel at a U.S. Chamber of Commerce Foundation "Hiring Our Heroes" military job fair in Washington January 8, 2016. REUTERS/Gary Cameron