January Wages Step Up in Biggest Jump Since 2009
Economy roars along, adding 200,000 jobs while pay for workers rises unexpectedly, as President Trump celebrates
Wages jumped in January by 2.9 percent, the largest monthly increase since 2009 — indicating the economy is expected to boom through 2018.
The year-over-year rate for January was more than economists expected, according to a Labor Department report released Friday.
Average hourly earnings rose 0.3 percent from December. But it was the 2.9 percent increase from a year earlier that grabbed attention from analysts Friday morning. It was a bit more than expected, and economists and traders began fretting about inflation.
The Dow Jones industrial average fell 278 points Friday morning.
While wage growth is a major goal of President Donald Trump’s administration, it could come with some costs such as inflationary pressure placed upon consumer goods and services. Inflation, in turn, could cause increases in interest rates.
“The gain in wages will add to concerns that inflationary pressures are building in the economy,” said Michael Feroli, chief U.S. economist at JPMorgan Chase and Co., speaking to Bloomberg News.
Feroli and other analysts expect the Federal Reserve to hike interest rates at a March meeting.
The unemployment rate remained steady at 4.1 percent, the lowest since 2000, according to the report.
The nation also created 200,000 new jobs in January.
The news within those new hires was particularly good for blue-collar workers: Manufacturers added 15,000 jobs, and construction companies added 36,000 jobs.
Labor force participation rate held at 62.7 percent, but persons outside of the workforce jumped by 153,000, to 95.7 million, according to CNBC.
The White House celebrated the news, saying “this morning’s jobs report, which shows 200,000 new jobs, caps a week of stellar economic news that included rising wages, higher confidence, and expanding manufacturing.”