Job growth picked up in January -- and so did pay
Businesses stepped up hiring in January, adding a better-than-expected 200,000 jobs, the Labor Department said Friday. The unemployment rate remained steady at 4.1 percent, the lowest level since 2000.
In another encouraging sign, wages rose at the fastest rate in eight years. Average hourly earnings, which had been rising at a modest 2.5 percent during the economic recovery that followed the Great Recession, increased by 2.9 percent from the year before.
The pay gains suggest employers are competing more fiercely for workers. Raises stemming from Republican tax cuts and minimum wage increases in 18 states also likely boosted wages. About 4.5 million workers, or 3 percent of the workforce, saw a wage boost in January, according to the Economic Policy Institute.
Even with revisions, which brought the job growth for the two prior months down by 24,000, the report shows strong footing in an economy in its ninth year of expansion, fueled by solid global economic growth and healthy consumer spending at home.
In addition, the number of involuntary part-time workers -- those who would prefer but can't find full-time work -- dropped by a fifth from this time last year.
"Not only is the economy doing well, but both wages and the quality of jobs are improving for people who are seeking work," said Cathy Barrera, chief economist at ZipRecruiter.
With revisions job growth averaged 192k for the past three months. That's strong. And wages now +2.9% y/y -- also a jump, though in a wiggly series.
— Jed Kolko (@JedKolko) February 2, 2018
"Some of this data has been skewed by some industries and sectors doing particularly well," said Andrew Hunter, co-founder of Adzuna, a job listings site. "Specifically, tech, engineering, finance, construction and mining are seeing the biggest growth in year-over-year wages."
The strong report increases the odds that the Federal Reserve will raise short-term interest rates in the coming months. U.S. stock markets dropped Friday morning after the jobs figures were reported, with the Dow Jones initially falling more than 300 points.
Still, the report held mixed messages. The African-American unemployment rate jumped nearly a percentage point, to 7.7 percent, after hitting a 45-year-low last month. The black unemployment rate is typically about twice the white unemployment rate, but is now substantially higher.
"The data for black workers are highly erratic, and it is likely that much of this change is driven by measurement error," wrote Dean Baker, senior economist at the Center for Economic and Policy Research, "but it is nonetheless discouraging to see this reported jump."
The Associated Press contributed to this report.