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U.S. payrolls increased more than expected in January, signaling a build in economic momentum as 2015 got underway.
Employers nationwide added 257,000 new jobs last month, the Bureau of Labor Statistics (BLS) said Friday. Economists projected a payroll increase of 230,000.
Adding to January's good news, payroll numbers for November and December were revised upward to 423,000 and 329,000, respectively, making November the best month for employment growth since May 2010.
The unemployment rate, which is measured from a separate household survey, ticked up slightly to 5.7 percent from December's 5.6 percent, reflecting an increase in the number of Americans looking for work. After accounting for annual adjustments to population controls, BLS said the civilian labor force rose by 703,000 in January, bringing the labor force participation rate back up to a still-low 62.9 percent.
"The January jobs report marks a great start for 2015," said Fannie Mae Chief Economist Doug Duncan, who will be a keynote speaker at the upcoming Five Star Government Forum in Washington, D.C. on March 18. "The payroll increase of 257,000 in January, combined with upward revisions to the prior two months, pushed the three-month average monthly gain to 336,000—the best since 1997."
While decision makers at the Federal Reserve are likely to take notice of the faster rate of growth, recent statements from the central bank indicate they're in no rush to move early on their plans to raise interest rates. In a statement in late January, the Federal Open Market Committee described the pace of job gains as "solid," instead pointing to the slow rate of inflation as the factor holding them back.
"This strong start to 2015 in the labor market will be received as encouraging news at the Federal Reserve which has signaled that the economic recovery may be strong enough to begin raising interest rates (i.e., 'monetary policy normalization') as early as its scheduled June meeting," said Robert Denk, Assistant VP for Forecasting and Analysis at the National Association of Home Builders (NAHB)
For all the positive signs in Friday's report, there were a few negative indicators, including an increase in the number of long-term unemployed people to 2.8 million—about 31.5 percent of the total jobless population.
Meanwhile, the number of Americans who have given up on looking for work, while down from December, remained elevated at 682,000.
There was one more big encouraging stat, though: Hourly earnings jumped 12 cents in January to an average of $24.75, a sharp turnaround from December and a good sign for consumers stymied by stagnant wages.
"A 0.5 percent jump in average hourly earnings was a welcome signal to American workers that recent months of robust hiring may finally lead to a much needed rising trend in wage gains," Duncan said. "The Fannie Mae January National Housing Survey, to be released next week, is expected to show that improving economic conditions are lifting consumer spirits and brightening views of their personal finances and the housing market. Together, our survey results and today’s jobs report strengthens our expectation that stronger hiring and firming income growth will be the primary catalysts for a faster pace of housing recovery in 2015."
