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US creates 257,000 jobs as labour market shows signs of recovery US creates 257,000 jobs as labour market shows signs of recovery
(about 1 hour later)
The US created 257,000 jobs in January – a figure that was higher than expected and indicative of an improving economy. There was some welcome economic news for Barack Obama when data released on Friday showed the number of new jobs created in January had totalled 257,000 – a higher figure than anticipated and one which said underlined the country’s ongoing economic recovery. Wages increased by the highest amount in six years.
Jobs were added in retail trade, construction, health care, financial activities, and manufacturing, while wages increased by the most in six years, according to figures released by the US Department of Labor today. The good buzz created by January’s figures was cemented by the revelation that job creation in November and December had been considerably stronger than previously believed.
The surprisingly robust report also showed that hiring was far stronger in November and December than it had previously estimated. Employers added 423,000 jobs in November - the most in 17 years – and job growth in December was revised sharply up to 329,000 from 252,000. The updated figures from the US Department of Labour showed employers added 414,000 jobs in November. Meanwhile, job growth in December was revised sharply upwards from 329,000 from 252,000. That made the three month growth performance the best in 17 years.
After incorporating these revisions, monthly jobs gains for the past three months averaged 336,000. "By any measure this was an extremely good report. This report continues to add evidence that the consumer has the potential to continue to move along at this very constructive pace," Tom Porcelli, chief US economist at RBC Capital Markets in New York, told Reuters.
Average hourly earnings for all employees on private nonfarm payrolls grew by 12 cents to $24.75, following a decrease of 5 cents in December. The figure means that wages have increased by 2.2 per cent over the course of the year.  That is ahead of inflation, which rose just 0.7 per cent in 2014. The figures released on Friday revealed that the average hourly wages increased 12 cents in January to $24.75, the biggest gain since September 2008. In the past year, hourly pay has increased 2.2 per cent. That is ahead of inflation, which rose 0.7 percent in 2014.
Average hourly earnings for private-sector production and nonsupervisory employees rose by 7 cents to $20.80. At the same time the unemployment rate last month rose to 5.7 per cent from 5.6 per cent. Yet analysts said that had increased because more Americans were looking for jobs. That meant they were more confident about their prospects.
The unemployment rate, which is worked out separately, rose from 5.6 per cent to 5.7 percent in January. However, more than 1 million Americans - the most since January 2000 - began looking for jobs and their numbers swelled the number of people counted as unemployed. "For the average American, it’s certainly good news — 2015 is going to be the year of the American consumer," said Russell Price, senior economist at the financial services firm Ameriprise, told the Associated Press. "With job growth being strong, we'’re going to see a pickup in wages and salaries."
Investors immediately responded to the better-than-expected jobs figures by selling ultra-safe US Treasurys, sending yields up. The yield on the benchmark 10-year Treasury note rose to 1.88 per cent from 1.81 per cent shortly before the jobs report was released. Investors immediately responded to the better-than-expected jobs figures by selling ultra-safe US Treasury bonds, sending yields up. The yield on the benchmark 10-year Treasury bond rose to 1.88 percent from 1.81 percent shortly before the employment report was released.
Stock market index futures also edged higher in pre-market trading. Futures that track the Standard & Poor's 500 index and the Dow Jones industrial average each rose about 0.4 percent. The jobs figures come at a time when oil prices are their lowest in many years, factors that are likely to further push consumer spending, said analysts.
A sharp drop in gas prices has held down inflation and boosted Americans' spending power. Strong hiring also tends to lift pay as employers compete for fewer workers. A big question is whether last month's jump in wages can be sustained. A recent study by the University of Michigan suggested that consumer confidence was now at its highest level in a decade. Americans increased their spending during the final three months of last year at the fastest pace in nearly nine years.
The Federal Reserve is closely monitoring wages and other job market data as it considers when to begin raising the short-term interest rate it controls from a record low near zero. The Fed has kept rates at record lows for more than six years to help stimulate growth. Most economists think the central bank will start boosting rates as early as June. The Federal Reserve is closely monitoring wages and other job market data as it considers when to begin raising the short-term interest rate it controls. It currently at a record low, close to zero.
Steady economic growth has encouraged companies to keep hiring. The economy expanded at a 4.8 per cent annual rate during spring and summer, the fastest six-month pace in a decade, before slowing to a still-decent 2.6 per cent pace in the final three months of 2014. The reserve has kept rates at record lows for more than six years to help stimulate growth. Most economists think the central bank will start boosting rates as early as June.      
There are now 3.2 million more Americans earning paychecks than there were 12 months ago. That tends to boost consumer spending, which drives about 70 per cent of economic growth.
Additional reporting by Associated Press