US jobs growth surges to 227k to beat expectations

WASHINGTON — Jobs growth in the United States surged more than expected last month, a sign that President Donald Trump has inherited a robust job market. 

The US Labour Department said on Friday (Feb 3) that employers added 227,000 jobs in January, the most since September and higher than last year’s average monthly gain of 187,000.

The unemployment rate ticked up to a low 4.8 per cent last month from 4.7 per cent in December. Yet the rate rose for a mostly good reason: More Americans started looking for work. The percentage of adults working or looking for jobs increased to its highest level since September.

Yet some of the economy’s weak spots remain: Average hourly wages barely increased last month, and the number of people working part-time but who would prefer full-time work rose. 

Revisions to November and December showed the economy created 39,000 fewer jobs than previously reported. Regardless, the labour market continues to tighten, which could soon spur a faster pace of wage growth. Federal Reserve officials view the labour market as being at or near full employment.

Economists polled by Reuters had forecast payrolls rising 175,000 last month and the unemployment rate unchanged at 4.7 per cent.

Mr Trump vowed during last year’s election campaign to deliver 4 per cent annual gross domestic product (GDP) growth, largely on the back of a plan to cut taxes, reduce regulations, increase infrastructure spending and renegotiate trade deals in the US’ favour.

Although details on the policy proposals remain sketchy, consumer and business confidence have surged following Trump’s election victory last November. But with the economy near full employment, some economists are sceptical of the 4 per cent growth pledge. Annual GDP growth has not exceeded 2.6 percent since the 2007-08 recession.

Average hourly earnings increased only three cents or 0.1 per cent last month. December’s wage gain was revised down to 0.2 per cent from the previously reported 0.4 percent increase.

January’s small rise in average hourly earnings is a surprise given that the minimum wage took effect in more than a dozen states last month. The small gain lowered the year-on-year increase in earnings to 2.5 per cent from 2.8 per cent in December.

Sluggish wage growth, if it persists, would suggest only a gradual pace of rate increases by the Fed. The US central bank, which hiked rates in December, has forecast three rate increases this year. 

On Wednesday, the Fed kept its benchmark overnight interest rate unchanged in a range of 0.5 per cent to 0.75 per cent. It said it expected labour market conditions would strengthen “somewhat further”.

The labour force participation rate, or the share of working-age Americans who are employed or at least looking for a job, was at 62.9 per cent last month, the highest level since September. All sectors of the economy added jobs in January.

Manufacturing payrolls increased by 5,000 jobs, rising for a second straight month as the oil-related drag on the sector eases. Construction employment jumped 36,000, the largest increase since March last year, likely boosted by warm weather, after December’s paltry 2,000 gain.

Retail payrolls, surprisingly surged 45,900, the biggest rise since February last year. Retailers, including Macy’s, Sears, American Apparel and Abercrombie & Fitch had announced job cuts in January amid store closures.

Government employment fell for a fourth straight month in January. Further declines are likely after the Trump administration enforced a hiring freeze on civilian federal government workers on Jan 22. AGENCIES