ARLINGTON, Va.—The latest jobs report – with 200,000 jobs gained in January – was "solid" and signals a possible interest rate hike next month, says NAFCU Chief Economist and Vice President of Research Curt Long.
The unemployment rate remained at 4.1% in January as 518,000 workers joined the labor force. This matched the lowest unemployment level since 2000, Long said.
"The January jobs report was solid. The addition of 200,000 jobs is encouraging, although downward revisions to prior months are a mitigating factor," said Long. "But the big news was a solid increase in wage growth to 2.9%, which is the high-water mark for the recovery. This provides even more ammunition for the Fed to raise rates next month."
The Federal Open Market Committee (FOMC) left the federal funds target rate at 1.25 to 1.5% during its meeting last week; the last rate increase was in December. The FOMC’s next two-day monetary policy meeting is set for March 20-21.
In other report data, total private-sector payroll employment increased 196,000 jobs during January. The goods-producing sector increased 57,000 jobs, while the service sector increased 139,000 jobs. Public sector employment rose 4,000 from the prior month, Long noted.
Average hourly earnings increased 9 cents to $26.74 in January. Over the last 12 months, wages are up 2.9%. Since 2009, year-over-year wage growth has averaged just 2.2%, Long said.