WASHINGTON (AP) – Steady economic growth and consumer spending likely led US employers to hire at a healthy pace in January and extend last year’s solid job gains.
Economists have forecast that the economy gained 230,000 jobs in January, according to a survey by FactSet. The unemployment rate is expected to stay at a six-year low of 5.6 per cent.
The predicted job gain would mark the 12th straight month above 200,000, the longest such stretch since 1994. And hiring has intensified recently: Job growth has averaged 264,000 a month in the past six months, up from an average of 194,000 during 2013.
But faster hiring has yet to lift Americans’ wages much. Average hourly earnings rose just 1.7 percent in December compared with 12 months earlier. That was barely ahead of the 1.3 per cent increase in inflation, according to the Federal Reserve’s preferred measure, which excludes the volatile categories of food and gas.
The Fed is closely monitoring wages and other job market data as it considers when to begin raising the short-term interest rate it controls from a record low near zero. The Fed has kept rates at record lows for more than six years to help stimulate growth. Most economists think the central bank will start boosting rates as early as June.
There are now nearly 3 million more Americans earning paychecks than there were a year ago. That additional spending money is lifting consumer spending, which drives about 70 per cent of economic growth.
Still, some analysts note that there are reasons to be cautious about the January data. Though surveys of manufacturing and services firms show that they were hiring last month, they were doing so at a slower pace than in previous months.
And the number of people applying for unemployment benefits rose in January after staying at historically low levels since fall. The number of applications typically reflects the pace of layoffs. Applications have since fallen back, suggesting that the increase reflected mainly layoffs of temporary employees who had been hired for the holiday shopping season.
Most economists think steady economic growth has encouraged companies to keep hiring. The economy expanded at a 4.8 per cent annual rate during spring and summer, the fastest six-month pace in a decade, before slowing to a still-decent 2.6 per cent pace in the final three months of 2014.