Paul Davidson

USA TODAY

The labor market began 2017 on a high note as U.S employers added 227,000 jobs in January, raising the prospect of solid hiring this year amid a burst of business confidence in the Trump administration.

The unemployment rate, which is calculated from a different survey, rose to 4.8% from 4.7%, the Labor Department said Friday. That's because a hefty rise in employment was offset by an even bigger increase in the number of Americans working and looking for jobs.

Economists surveyed by Bloomberg expected 175,000 job gains.

The news cheered investors who pushed up the Dow Jones industrial average by 186 points, ending the week at 20,071. Financial stocks contributed to the broader market's gains after President Trump signed an executive order to roll back some Obama-era restraints on Wall Street banks.

Businesses added 237,000 jobs, driven by retail, construction and financial services. Federal, state and local governments lost 10,000.

On the downside, job gains for November and December were revised down by 39,000. November’s was revised to 164,000 from 204,000, and December’s to 157,000 from 156,000.

Average hourly wages rose a tepid 3 cents to $26, moderating annual gains to 2.5% from 2.9% in December. Economists expected the 2.9% jump at least to hold after about 20 states raised their minimum wage last month. The tight labor market was expected to juice wage growth as employers compete to attract fewer job candidates.

The disappointing pay increase could temper inflation and help convince the Federal Reserve to wait until June to raise interest rates again despite January's healthy job gain, says economist Andrew Hunter of Capital Economics. The Fed raised its benchmark rate in December for the first time in a year but gave no signal after a meeting this week that it’s poised to act again in the very near term.

Fed stands pat on rates, no signal on March hike

Stuart Hoffman, chief economist at PNC Financial Services Group, noted that all of the goods-producing sectors, which tend to pay higher salaries, added jobs. Construction companies added 36,000; manufacturers, 5,000; and mining and logging, 4,000. Oil prices partly rebounded last year, prompting producers to restart shuttered wells and order steel pipes and other materials from factories.

Elsewhere, retailers added 46,000 jobs; professional and business services, 39,000; financial activities, 32,000: and leisure and hospitality, 34,000.

“I think the breadth of the job gains, in addition to the size, is encouraging,” Hoffman says.

Hoffman added, “The wage picture is improving but at a snail's pace.”

Another area of concern: a rise of 242,000 in the number of part-time workers who prefer full-time jobs. That pushed up a broader measure of joblessness that includes those workers, the unemployed and discouraged Americans on the sidelines to 9.4% from 9.2%.

Many economists say average monthly job growth will slow to about 160,000 this year from 187,000 last year and 226,000 in 2015 as the low unemployment rate reduces the supply of available workers. That pace would be more than enough to continue to bring down the unemployment rate.

Other recent measures of the labor market have been encouraging. Payroll processor ADP said businesses added a better-than-expected 246,000 jobs last month. Initial jobless claims, a gauge of layoffs, have hovered near four-decade lows. And an index of manufacturing employment hit a nearly two-year high in January.