American companies hired more workers in January and hourly wages rose at the quickest annual rate since the recession as the economy accelerated into 2018.
Non-farm payrolls jumped 200,000 last month, ahead of the 180,000 median estimate and the December total was revised up to 160,000 from 148,000, reported the Department of Labor on Friday. Manufacturing employment gained 15,000 following the prior month's 21,000 increase.
The unemployment rate was unchanged at 4.1 percent. The U-6 underemployment rate, which includes people who are working part-time in lieu of full-time jobs or have looked for work in the past year, rose 0.1 percent to 8.2 percent.
Average hourly earnings climbed 2.9 percent year to year, the largest annual increase since June 2009, the month the recession ended. They were 2.7 percent higher in December revised from 2.5 percent.
Part of the gain in the annual wage percentage was due to the unexpected drop in the average number of weekly hours worked, which slipped to 34.3 from 34.5. On the month hourly wages rose 0.3 percent as expected and December was revised to 0.4 percent from 0.3 percent.
Treasury yields and the dollar rose while equities tumbled sharply. The Dow was off 339.50 points at 11:57 am.
The Federal Reserve projects three 0.25 percent increase this year, with the first expected next month. This report, particularly the wage component, heightens the possibility that a effervescent U.S economy may elicit a fourth rate hike this year.
Yesterday the Atlanta Federal Reserve estimated that GDP was expanding at a 5.4 percent annual pace in the first quarter.
The 10-year Treasury was trading at 2.8411 percent at 11:41 am in New York, up 5 basis points. This is the highest return for this bond since it briefly moved above 3 percent to 3.04 percent in in December 2013.
The dollar rose against its major competitors, soaring almost a figure versus the euro to 1.2407 before retreating and reaching 110.47 against the yen.
Chief Market Strategist
Charts: Thompson/Reuters, Bloomberg