The US economy added 257,000 jobs in January, beating expectations of 230,000 jobs and giving the market renewed confidence in the health of the nation’s economy.
The Labor Department also revised jobs data from for November and December to show 147,000 more jobs were created than previously estimated. The revised figures for November show 423,000 jobs were created – the most since May 2010.
“With today’s strong employment report, we have now seen eleven straight months of job gains above 200,000 – the first time that has happened in nearly two decades,” wrote Jason Furman, chairman of the White House’s council of economic advisers.
The private sector has now added 11.8m jobs over 59 straight months of job growth, extending the longest streak on record.
“We keep trying to tell everyone that the US economy is enjoying a period of unusual strength; maybe now people will believe us,” said Paul Ashworth, chief US economist at thinktank Capital Economics. “The economy is doing so well that it has created more than 1 million additional jobs in the last three months alone. That’s the strongest pace of job growth we’ve seen since 1997.”
January’s increase was the biggest since November 2008, and the 11th straight month that more than 200,000 new jobs were created – the longest consecutive streak since 1994.
Despite the increase in new jobs, the unemployment rate increased slightly from 5.6% to 5.7%.
Wages also increased, with average hourly earnings for all employees on private nonfarm payrolls up 12 cents to $24.75, following a decrease of 5 cents in December. Over the last 12 month average wages have increased by 2.2%, up from a previous estimate of 1.9%.
David Lamb, senior dealer at the foreign exchange specialists Fexco, said: “Seldom do economists get everything they want. Yet today might just be one of those days.
“America’s straight-A jobs report sent the markets and the dollar soaring – with the Greenback spiking 1% against the euro within minutes. With wages rising and the rate of job creation kicking into overdrive, even the most bearish will struggle to find fault with this latest snapshot of the US economy.”
This strong jobs report raises the probability that the US Federal Reserve may start to raise interest rates, which have been kept near zero since 2008.
“[The] very strong labour market report has put a June rate hike by the Fed back into the picture after a month of rather disappointing data,” Rob Carnell, chief international economist at ING, said. “With wages turning higher, the Fed can justify ignoring the plummeting headline inflation rate, and instead, focus more on core inflation and wages. A little bit of more positive activity data would also help the Fed hawks.
“About the only fly in the ointment in this release was the unemployment rate, and even this is really evidence more of the huge surge in the labour force [up by more than 1m] ... Such a rise is probably statistical noise, but it could also be evidence of greater optimism about the chances of gaining work, and a return to the labour market by marginally inactive people.”
Ashworth added: “Employment growth is clearly on fire and its beginning to put upward pressure on wage growth. The Fed can’t wait much longer in that environment, particularly not when interest rates are starting at near-zero.”
