US jobs and wages rise in January

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The US labour market barrelled forward in January, as employers added more jobs than expected and wage growth was its strongest in more than eight years.

US payrolls expanded by 200,000 last month, driven by hiring in construction, food services and health care, the US Labor Department said.

The average hourly wage for private sector workers crept up 2.9% compared to January 2017.

The unemployment rate held steady at 4.1%.

Economists have puzzled over lacklustre wage growth, which has lagged in prior months despite the decline in the unemployment rate.

Without higher wages, economists have warned that economic growth will be difficult to sustain, since consumer spending plays a large role in the US economy.

The Labor Department report, released on Friday, showed average hourly earnings for private sector workers rose 9 cents in January, to $26.74. For the year, the increase was 75 cents.

The wage uptick coincided with mandatory minimum pay increases in 18 states. Major employers such as Walmart have also said they planned to boost earnings or provide bonuses.

Those factors may have helped lift last month’s numbers, but they make it harder to say if the increases will continue, said Lindsey Piezga, chief economist for fixed income at Stifel, based in Chicago.

“While that is encouraging, what we really need to see is sustained wage growth, not one-off, month-to-month volatility,” she said.

Other data in the report was a reminder that monthly gains can be fleeting.

For example, the unemployment rate among black workers jumped in January to 7.7%, rising after falling to a record low of 6.8% in December.

President Donald Trump had trumpeted that decline as evidence of economic improvement.

 

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