US job growth slows, unemployment rate at 8-year low

WASHINGTON: U.S. employment gains slowed more than expected in January as the boost to hiring from unseasonably mild weather faded, but surging wages and an unemployment rate at an eight-year low suggested the labor market recovery remains firm.

Nonfarm payrolls increased by 151,000 jobs last month and the unemployment rate slipped to 4.9 percent, the lowest since February 2008, the Labor Department said on Friday.

Data for November and December was revised to show 2,000 fewer jobs created than previously reported.

Economists polled by Reuters had forecast employment increasing by 190,000 in January and the jobless rate steady at 5 percent.

Also taking the sting from the softer payrolls number, employers increased hours for workers.

Manufacturing, which has been undermined by a strong dollar and weak global demand, added the most jobs since August 2013."That... serves as a caution to markets that it is too early to take a Federal Reserve March hike completely off the table," said Mohamed el-Erian, chief economic advisor at Allianz in Newport Beach, California.

The dollar rose against a basket of currencies on the data as traders saw more rate hikes this year.

Prices for U.S. Treasury debt fell and U.S. stock futures extended losses.

Tightening financial market conditions had undercut the case for a Fed interest rate hike next month.

The U.S. central bank raised its short-term interest rate in December for the first time in nearly a decade.

Federal Reserve Chair Janet Yellen has said the economy needs to create just under 100,000 jobs a month to keep up with growth in the working age population.

The sharp step-down in job gains from the fourth quarter´s brisk clip largely reflected payback after the warmest temperatures in years bolstered hiring in weather-sensitive sectors like construction.

January employment also lost the lift from the hiring of couriers and messengers, which was buoyed in November and December by strong online holiday sales.

Coming in the wake of an abrupt slowdown in economic growth in the fourth quarter and a sharp stock market sell-off, the fairly upbeat details of the closely watched employment report could ease concerns about the economic outlook.

The economy grew at a 0.7 percent annual rate in the fourth quarter, restrained by headwinds that included the strong dollar and efforts by businesses to sell off inventory.

Even with slower job growth, wages rebounded sharply after holding steady in December.

Average hourly earnings increased 12 cents or 0.5 percent.

That left the year-on-year gain in earnings at 2.5 percent as the unusually strong wage gains seen in January 2014 dropped out of the picture.

But with the jobless rate in a range most economists associate with full employment, wage growth is expected to pick-up this year.

With its January employment report, the government published its annual "benchmark" revisions and updated the formulas it uses to smooth the data for regular seasonal fluctuations.

It also incorporated new population estimates.

The government said the level of employment in March of last year was 206,000 lower on a seasonally adjusted basis than it had reported.

The shift in population controls means figures on the labor force or number of employed or unemployed in January are not directly comparable to December.

The labor force participation rate, or the share of working-age Americans who are employed or at least looking for a job was at 62.7 percent, near four-decade lows.