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U.S. Jobs Top Estimates With 225,000 Gain, Wages Accelerate

Reade Pickert
U.S. Jobs Top Estimates With 225,000 Gain, Wages Accelerate

(Bloomberg) -- U.S. employers ramped up hiring in January and wage gains rebounded, providing fresh evidence of a durable jobs market that backs the Federal Reserve’s decision to stop cutting interest rates and hands President Donald Trump an early election-year boost.

Payrolls increased by 225,000 after an upwardly revised 147,000 gain in December, according to a Labor Department data Friday that topped all estimates of economists. The jobless rate edged up to 3.6%, still near a half-century low, while average hourly earnings climbed 3.1% from a year earlier.

The dollar maintained gains, yields on the 10-year Treasury were lower and U.S. stocks declined from a record high as investors remained focused on the potential economic fallout from the coronavirus that has now claimed more than 600 lives.

Annual revisions to historical data took some shine off one of Trump’s main bragging points, cutting the 2018 job gain to 2.31 million from 2.68 million. The 2017 and 2019 gains were about 2.1 million, meaning each year under Trump -- while still strong -- has been slightly slower than the 2.35 million rise in the final year of the Obama administration.

Click here for Bloomberg’s TOPLive blog on the jobs report.

Despite the revisions, the report shows the economy has retained strength, which Trump has heralded as a key tenet of his re-election campaign and this week in his State of the Union address. The solid hiring defies expectations for a step down to a slower pace of job growth as businesses delay investment, and exceeded the 175,000 average monthly gain for 2019.

The pace also supports Fed policy makers’ view of the labor market as strong, and is more than sufficient to keep up with population growth. At the same time, Boeing Co.’s halt on production of the troubled 737 Max airplane and fears of the coronavirus spreading are likely to weigh on the U.S. economy in coming months.

Steady Number

Average hourly earnings rose 0.2% from the prior month, slightly less than estimated but an acceleration from the December reading.

Payroll gains were broad-based and topped the median estimate for 165,000. Education and health services employment added 72,000, while transportation and warehousing rose by the most in a year.

“This is a steady-as-she-goes number,” Societe Generale U.S. Rates Strategy Head Subadra Rajappa said on Bloomberg Television. “Broadly speaking, this doesn’t really change the outlook on employment.”

Weather Impact

The unexpected job strength also reflects robust gains in weather-sensitive sectors including construction, which climbed by 44,000 for the strongest growth in a year in an unseasonably warm month.

Weekly hours worked held at 34.3 hours for a third month, matching the lowest level for most of the past decade. Economists look to hours worked for early signs of labor market softening as companies often cut hours before laying off workers.

In a positive sign, the participation rate, or share of working-age people in the labor force, increased to the highest since 2013. For prime-age Americans, age 25 to 54, the rate climbed to an 11-year high.

Other Highlights

The drop in payrolls for manufacturers was steeper than estimated, driven by a decrease in payrolls for motor vehicles and parts workers.Private employment, or hiring at companies, climbed by 206,000, topping estimates. Government payrolls climbed by 19,000 for the best gain since August.The U-6, or the underemployment rate, climbed to 6.9% from 6.7%. This measure includes part-time workers who’d prefer a full-time position and those who aren’t actively looking, therefore offering a more comprehensive view of the health of the labor market.

(Updates markets in third paragraph.)

--With assistance from Kristy Scheuble, Sophie Caronello, Ana Monteiro, Max Reyes, Alister Bull and Vince Golle.

To contact the reporter on this story: Reade Pickert in Washington at epickert@bloomberg.net

To contact the editors responsible for this story: Scott Lanman at slanman@bloomberg.net, Jeff Kearns

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