U.S. employers added more jobs than expected in January and wages saw their biggest jump since the end of the Great Recession, suggesting the long-awaited surge in salaries may be on the horizon.
The Labor Department said nonfarm payrolls grew by 200,000 last month, beating economists’ expectations of jobs growth of 180,000. Growth in December had been disappointing, with only 160,000 jobs added.
For a third straight month, the unemployment rate was unchanged at 4.1%.
Since the recovery began, job gains have been solid and consistent, while salary growth has been weak. But the January report indicated that may be changing, with average hourly earnings rising 0.3% for the month, reflecting an annualized gain of 2.9% — the highest level since mid-2009.
“People have been wondering when the wages are going to start to rise,” Catherine Barrera, chief economist of the online job marketplace ZipRecruiter, told The New York Times. “I think that over the first six months of this year, we’re really going to start to see the wages rise.”
The wages data are preliminary and several times in recent years, wage growth has appeared to pick up, only to fall back to earth in subsequent months. But according to The Times, “there is reason to think that pay gains will prove more durable this time around” as the tightening labor market forces companies to compete harder for workers.
“It’s as tough as it’s ever been,” Michael Mabry, president of Mooyah Burgers, Fries and Shakes, a restaurant chain based in Texas, said of the current hiring environment.
Construction reported the biggest jobs gain by sector with 36,000, while bars and restaurants added 31,000, and health care was up 21,000. Manufacturing showed a gain of 15,000 and durable goods-related industries added 18,000.
“Perhaps the biggest positive surprise on hiring is the continued surge for the goods-producing sector with manufacturing and construction leading the way,” Mark Hamrick, Bankrate.com’s senior economic analyst, told CNBC.
While the labor force participation rate held steady at 62.7%, those counted as not in the labor force jumped 153,000 to 95.7 million.