US employers hired more people in January on net than economists had forecast, according to a Labor Department report released Friday.

Wage growth, which has been sluggish through much of this economic expansion, increased at its fastest rate since 2009 year-over-year.



The US economy added more jobs than forecast in January, and wage growth rose at its fastest pace since the recession, according to a report from the Bureau of Labor Statistics on Friday.

Nonfarm payrolls increased by 200,000, beating the median of Bloomberg's poll that had forecast 180,000 net new jobs.

The unemployment rate remained at a 17-year low of 4.1%.

Hiring was broad-based across industries, including manufacturing and mining, two areas President Donald Trump has promised to revitalize. The black unemployment rate, which has been a recent point of emphasis for the administration and fell to a record-low 6.8% in December, increased in January, to 7.7%.

Wage growth was much stronger than forecast. Average hourly earnings rose 2.9% year-on-year, the strongest pace since the recession.

"Could we see wage growth break through the 3 percent barrier? That's a key question for the coming months," said Mark Hamrick, the senior economic analyst at Bankrate.com.

"If that happens, then the markets will have to consider whether the economy is overheating — something we haven't had to think about since the financial crisis and recession."

Andy Kiersz/Business Insider

Wages rose faster than expected compared with December even after January 15 — payday and a Monday — fell outside the survey week of the 12th for some employers. Average hourly earnings rose 0.3% month-on-month.

The acceleration in wage growth last month solidified the market's expectation that the Federal Reserve would raise interest rates at its meeting in March, Hamrick said. Faster wage growth would signal more gains for the economy, combined with tax cuts that are set to show up in Americans' paychecks by the end of February.

"It definitely makes it a bit more likely that the Fed will have to do more than the three hikes that they're currently planning for this year," said Luke Bartholomew, an investment strategist at Aberdeen Standard Investments. Earlier this week, the Fed's policy statement showed that policymakers expected inflation to rise this year and stabilize around its 2% objective.

"US bond markets aren't going to like it though," Bartholomew said. "Treasurys have been suffering a sharp sell-off and such strong numbers are going to pour fuel on the fire."

Treasurys sold off again after the jobs report, sending the 10-year yield to a new four-year high of 2.84%.

Many of the economic data points that preceded the BLS report on Friday pointed to an economy that was near full employment. They included readings on unemployment claims, job openings, and even anecdotal complaints from employers who wanted to hire but couldn't find people with the skills they wanted.