• Payroll employment rose 200k in January up from an upwardly revised 160k gain in December

• The January unemployment rate unchanged at 17-year low of 4.1%

• Wages grow at fastest pace in more than 8 years

• Early-year wage acceleration won’t push Fed to hike rates faster or further

The US jobs report for January was highly positive, easily beating expectations on both the headline data and, very importantly, wage growth. US payrolls rose by 200,000 in January against prior consensus expectations of around 180,000. Additionally, December's initial 148,000 disappointment has now been revised up to a somewhat less disappointing 160,000. While the job growth in December was upwardly revised, the jump in employment in November was downwardly revised to 216,000 jobs from 252,000 jobs, reflecting a net downward revision of 24,000 jobs over the two months.

Hiring bounced back in January after a milder gain in December. Construction companies added 36,000 jobs, restaurants took on 31,000 new workers and health-care firms increased payrolls by 21,000. Manufacturers even increased employment by 15,000 despite glaring shortages of skilled labor. Employment in most other industries was little changed. Over the last three months, the US gained an average of 192,000 new jobs.

Perhaps even more telling, however, were the wage growth figures. Annualized wage growth in January hit a long-term high of 2.9%, a rate of growth not seen since 2009. On a monthly basis, average hourly earnings grew by 0.3%, higher than the expected 0.2%, and December's monthly wage growth was revised up from 0.3% to 0.4%. December's gain was revised upward to +2.7% yoy.

The unemployment rate for January remained steady and in-line with expectations at 4.1%. The unemployment rate remained at a seventeen-year low as the labor force expanded by 518,000 people.

Source: BIMB Securities Research - 5 Feb 2018