January job gains show economy’s strength

WASHINGTON – A resurgent job market in January signaled that the U.S. economy is finally regaining the kind of strength typical of a healthy recovery – with hiring accelerating, wages rising and people who had given up their job hunts starting to look again.

Freer-spending consumers and steady economic expansion have boosted hiring for the past three months to the most robust pace in 17 years.

In January, employers added 257,000 jobs, after 329,000 in December and a sizzling 423,000 jobs in November, the government reported Friday. The November and December gains were much higher than the government had first estimated.

“The labor market was about the last thing to recover from the Great Recession, and in the last six months it has picked up steam,” said Bill Hampel, Credit Union National Association’s chief economist. “The benefits for the middle class are now solidifying.”

Paul Ashworth, chief U.S. economist at Capital Economics, predicts the Fed will raise rates from record lows in June.

“Employment growth is clearly on fire, and it is beginning to put upward pressure on wage growth,” Ashworth wrote in a research note. “The Fed can’t wait much longer in that environment, particularly not when interest rates are starting at near zero.”

Indeed, investors responded to the figures by selling U.S. Treasurys, sending yields up, a sign that many think a Fed rate hike might be more imminent than they thought before. The yield on the 10-year Treasury note rose to 1.94 percent from 1.81 percent shortly before the jobs report was released.

Stock investors appeared nervous about a Fed rate increase. The Dow Jones industrial average closed down 60 points, or 0.3 percent, to 17,824.

The unemployment rate rose last month to 5.7 percent from 5.6 percent. But that occurred for a good reason: More than 700,000 Americans – the most in six years – began looking for jobs. Not all of them found work, but the influx of job hunters suggested that Americans have grown more confident about their prospects.

There are now 3.2 million more Americans earning paychecks than there were 12 months ago.