U.S. job growth accelerates in January, but wages lag

Reuters - U.S. job growth surged more than expected in January as construction firms and retailers ramped up hiring, which likely gives the Trump administration a head start as it seeks to boost the economy and employment.

Nonfarm payrolls increased by 227,000 jobs last month, the largest gain in four months, the Labor Department said on Friday. But the unemployment rate rose one-tenth of a percentage point to 4.8 percent and wages rose only by three cents, suggesting that there was still some slack in the labor market.

Revisions to November and December showed the economy created 39,000 fewer jobs than previously reported. Still, the labor market continues to tighten, which could soon spur a faster pace of wage growth. Federal Reserve officials view the labor market as being at or near full employment.

Prices for U.S. government bonds rose as traders focused on the disappointing wage growth, which was seen keeping the Fed on a gradual path of interest rate increases. The dollar was little changed against a basket of currencies.

U.S. stocks were trading higher. Economists polled by Reuters had forecast payrolls rising 175,000 last month and the unemployment rate unchanged at 4.7 percent.

"While there's a great deal of anticipation surrounding steps that President Trump and the GOP-led Congress are expected to take to boost the economy, that's going to take more time," said Mark Hamrick a senior economic analyst at Bankrate.com in Washington.

President Donald Trump vowed during last year's election campaign to deliver 4 percent annual gross domestic product growth, largely on the back of a plan to cut taxes, reduce regulations, increase infrastructure spending and renegotiate trade deals in the United States' favor.

Although details on the policy proposals remain sketchy, consumer and business confidence have surged in the wake of Trump's election victory last November. But with the economy near full employment, some economists are skeptical of the 4 percent growth pledge. Annual GDP growth has not exceeded 2.6 percent since the 2007-08 recession. (ontinueReading