American job market’s solid 2018 start raises wage-pickup hopes

Bloomberg

The US labour market began 2018 on a strong note as Americans saw wage gains accelerate amid better-than-expected hiring, raising hopes that a long-overdue pickup in worker pay is finally in train.
Nonfarm payrolls rose 200,000 in January, exceeding the median estimate of economists for a 180,000 increase, Labor Department data showed, as the jobless rate held at a near 17-year low of 4.1 percent. Average hourly earnings rose 2.9 percent from a year earlier, the most since June 2009.
Stocks plunged by the most since 2016, as the data reinforced the
Federal Reserve’s outlook for three interest-rate hikes this year under incoming Chairman Jerome Powell, and indicated that a fourth may be possible. The outlook for rate increases was already relatively firm, with businesses bullish amid strong demand, and further optimism on the heels of the tax cuts likely to underpin hiring and investment throughout the year.
While caveats on the figures included a shorter workweek—which may have influenced earnings—and a possible boost from minimum-wage hikes, the first major economic data of 2018 showed broad-based strength in hiring that will continue to support consumer spending, the biggest part of the economy. Coming months will show whether the pay gains represent a sustained improvement that’s more in sync with a tight job market and employers’ complaints of a shortage of skilled workers.
The year “is getting off to a good start,” said Michael Feroli, chief US economist at JPMorgan Chase & Co., who correctly projected the payrolls gain. “The thing that’s catching everyone’s attention is strength in wages. It looks like the tightening in the labour market is finally gaining some traction with compensation growth.”
The Labor Department’s figures included its annual benchmark update to the establishment survey, spanning payrolls, hours and earnings over the past five years.
Average hourly earnings rose 0.3 percent from the prior month following an upwardly revised 0.4 percent gain, the report showed. The advance from a year earlier—which partly reflected a downward revision to the January 2017 wage figure—compared with projections for a 2.6 percent increase. December’s gain was revised upward to 2.7 percent.
Given the extent of revisions to past data, it may take some more time to determine whether wages—which have been the soft spot of an otherwise strong job market—are undergoing a more durable acceleration. During most of this expansion, businesses across the economy have largely resisted giving out more generous paychecks even as labour-market slack continued to diminish.
The above-consensus payroll print and increase in average hourly earnings was partly tempered by a drop in the length of the workweek. The labour market is on solid footing, potentially accelerating, and on track to drive the unemployment rate lower in the near term.

‘Trump created more US jobs’
Bloomberg

President Donald Trump, who frequently boasts that he’s creating jobs, has another statistic to tout: Annual data revisions released by the Labor Department showed
the economy actually added 118,000 more workers than previously reported during his first year in office.
But for those keeping score, former President Barack Obama also gained: data were revised to show that there were 104,000 more jobs added in his last full year in 2016, part of a multi-year revision that added 230,000 workers to the previous total employment count.
The new totals show 2.34 million jobs added in 2016 and 2.17 million in 2017.