Tag Archives: labor market

U.S. labor market hot, jobs hard to fill: Fed’s Harker

FILE PHOTO: People wait in line to attend TechFair LA, a technology job fair, in Los Angeles, California, U.S., January 26, 2017. REUTERS/Lucy Nicholson - RC1458E83C90

(Reuters) – U.S. employers are struggling to fill jobs and that is unlikely to change any time soon given the labor market is getting quite tight, Federal Reserve Bank of Philadelphia President Patrick Harker said on Tuesday.

“We have a labor market with very little slack left, and the most common refrain I hear from employers is that they can’t fill the jobs they have,” Harker said in prepared remarks to a conference on higher education. “Those demographic and technological pressures are unlikely to recede.”

The unemployment rate fell to near a 49-year low of 3.7 percent last month.

(Reporting by Jonathan Spicer; Editing by Chizu Nomiyama)

U.S. inflation steadily firming; labor market strong

FILE PHOTO: People shop in Macy's Herald Square in Manhattan, New York, U.S., November 23, 2017. REUTERS/Andrew Kelly/File Photo

By Lucia Mutikani

WASHINGTON (Reuters) – U.S. consumer prices barely rose in June, but the underlying trend continued to point to a steady buildup of inflation pressures that could keep the Federal Reserve on a path of gradual interest rate increases.

Other data on Thursday showed first-time applications for unemployment benefits dropped to a two-month low last week as the labor market continues to tighten. The Fed raised interest rates in June for a second time this year and has forecast two more rate hikes before the end of 2018.

“U.S. inflation continues to drift gradually higher in response to a nearly fully employed economy, with some nudging from tariffs,” said Sal Guatieri, a senior economist at BMO Capital Markets in Toronto. “The Fed has every reason to pull the rate trigger again in October.”

The Labor Department said its Consumer Price Index edged up 0.1 percent as gasoline price increases moderated and the cost of apparel fell. The CPI rose 0.2 percent in May. In the 12 months through June, the CPI increased 2.9 percent, the biggest gain since February 2012, after advancing 2.8 percent in May.

Excluding the volatile food and energy components, the CPI rose 0.2 percent, matching May’s gain. That lifted the annual increase in the so-called core CPI to 2.3 percent, the largest rise since January 2017, from 2.2 percent in May.

Economists polled by Reuters had forecast both the CPI and core CPI rising 0.2 percent in June.

The Fed tracks a different inflation measure, which hit the U.S. central bank’s 2 percent target in May for the first time in six years. Economists expect the personal consumption expenditures (PCE) price index excluding food and energy will overshoot its target.

U.S. financial markets were little moved by the data.

In another report on Thursday, the Labor Department said initial claims for state unemployment benefits dropped 18,000 to a seasonally adjusted 214,000 for the week ended July 7, the lowest level since early May.

That suggests robust labor market conditions prevailed in early July. The economy created 213,000 jobs in June.

A tightening labor market and rising raw material costs are expected to push up inflation through next year. Manufacturers are facing rising input costs, in part because of tariffs imposed by the Trump administration on lumber, aluminum and steel imports.

So far, they have not passed on those higher costs to consumers. Fed officials have indicated they would not be too concerned with inflation overshooting its target.

Last month, gasoline prices rose 0.5 percent after increasing 1.7 percent in May. Food prices gained 0.2 percent, with food consumed at home rebounding 0.2 percent after falling 0.2 percent in May. Food prices were unchanged in May.

Owners’ equivalent rent of primary residence, which is what a homeowner would pay to rent or receive from renting a home, rose 0.3 percent last month after increasing by the same margin in May. But the cost of hotel accommodation fell 3.7 percent after rising 2.9 percent in May.

Healthcare costs advanced 0.4 percent, with the price of hospital services surging 0.8 percent. Healthcare prices gained 0.2 percent in May. Consumers also paid more for prescription medication last month.

Prices for new motor vehicles rose for a second straight month. There were also increases in the cost of communication, motor vehicle insurance, education and alcoholic beverages.

But apparel prices fell 0.9 percent after being unchanged in May. The cost of airline tickets declined for a third straight month. Prices of household furnishings and tobacco also fell last month.

(Reporting by Lucia Mutikani; Editing by Andrea Ricci)

U.S. weekly jobless claims unexpectedly fall

WASHINGTON (Reuters) – New applications for U.S. unemployment benefits unexpectedly fell last week and the number of Americans on jobless rolls declined to a near 44-1/2-year low, pointing to a rapidly tightening labor market.

Initial claims for state unemployment benefits dropped 4,000 to a seasonally adjusted 218,000 for the week ended June 9, the Labor Department said on Thursday. Claims data for the prior week was unrevised.

Economists polled by Reuters had forecast claims rising to 224,000 in the latest week. The Labor Department said claims for Maine and Hawaii were estimated last week.

The four-week moving average of initial claims, viewed as a better measure of labor market trends as it irons out week-to-week volatility, fell 1,250 to 224,250 last week.

The labor market is considered to be close to or at full employment, with the jobless rate at an 18-year low of 3.8 percent. The unemployment rate has dropped by three-tenths of a percentage point this year. It is near the Federal Reserve’s forecast of 3.6 percent by the end of this year.

The U.S. central bank on Wednesday raised interest rates for a second time this year and projected two more rate hikes in the second half of 2018. It said the labor market “continued to strengthen” and that job gains have been “strong.”

Layoffs have remained very low amid signs of growing worker shortages across all sectors of the economy. The were a record 6.7 million job openings in April. The number of unemployed people per vacancy slipped to 0.9 from 1.0 in March, indicating that most people looking for a job are likely to find one.

The claims report also showed the number of people receiving benefits after an initial week of aid declined 49,000 to 1.70 million in the week ended June 2, the lowest level since December 1973. The four-week moving average of the so-called continuing claims decreased 3,750 to 1.73 million, also the lowest level since December 1973.

(Reporting by Lucia Mutikani; Editing by Andrea Ricci)

U.S. job openings hit record high of 6.7 million in April

FILE PHOTO: A man carrying a stack of job listings listens to a discussion at the One Stop employment center in San Francisco, California, August 12, 2009. REUTERS/Robert Galbraith/File Photo

WASHINGTON (Reuters) – U.S. job openings rose to a record high in April, but hiring continued to lag, pointing to a worsening shortage of workers.

Job openings, a measure of labor demand, increased to a seasonally adjusted 6.7 million from 6.6 million in March, the Labor Department said on Tuesday in its monthly Job Openings and Labor Turnover Survey, or JOLTS.

That was the highest level since the government started tracking the series in December 2000. The number of hires rose to 5.6 million in April from 5.5 million in the prior month.

The labor market is viewed as being either near or at full employment, with the jobless rate at an 18-year low of 3.8 percent.

(Reporting by Lucia Mutikani; Editing by Paul Simao)

U.S. job growth surges, unemployment rate falls to 3.8 percent

FILE PHOTO: Job seekers line up to apply during "Amazon Jobs Day," a job fair being held at 10 fulfillment centers across the United States aimed at filling more than 50,000 jobs, at the Amazon.com Fulfillment Center in Fall River, Massachusetts, U.S., August 2, 2017. REUTERS/Brian Snyder/File Photo

By Lucia Mutikani

WASHINGTON (Reuters) – U.S. job growth accelerated in May and the unemployment rate dropped to an 18-year low of 3.8 percent, pointing to rapidly tightening labor market conditions, which could stir concerns about inflation.

The closely watched employment report released by the Labor Department on Friday also showed wages rising solidly, cementing expectations that the Federal Reserve will raise interest rates this month. The bullish report also raises the possibility that the economy could overheat.

Overall, the U.S. economy looks strong,” said Paul Ashworth, chief economist at Capital Economics in Toronto. “In that environment, we still expect the Fed to hike interest rates an additional three times this year.”

Nonfarm payrolls increased by 223,000 jobs last month as warm weather boosted hiring at construction sites. There were also big gains in retail and leisure and hospitality payrolls. The economy created 15,000 more jobs than previously reported in March and April.

Last month’s one-tenth of a percentage point drop in the unemployment rate pushed it to a level last seen in April 2000. The jobless rate is now at a level that the Fed forecast it would be at by the end of this year.

Average hourly earnings rose eight cents, or 0.3 percent last month after edging up 0.1 percent in April. That lifted the annual increase in average hourly earnings to 2.7 percent from 2.6 percent in April.

The strong employment report added to a string of upbeat economic data, including consumer spending, industrial production and construction spending, that have suggested economic growth was regaining speed early in the second quarter after slowing at the beginning of the year.

The strength comes even as the stimulus from a $1.5 trillion income tax cut package and increased government spending is yet to filter through the economy. Renewed fears of a trade war after the Trump administration imposed tariffs on steel and aluminum imports from Canada, Mexico and the European Union, however, cast a dark cloud over the economic outlook.

Inflation is running just below the Fed’s 2.0 percent target. The U.S. central bank increased borrowing costs in March and forecast at least two more rate hikes for this year.

After the employment report, traders increased bets that the Fed would raise interest rates four times this year. U.S. Treasury yields rose and the dollar gained versus a basket of currencies. Stocks on Wall Street were trading higher.

BROAD JOB GAINS

Economists polled by Reuters had forecast nonfarm payrolls increasing by 188,000 jobs last month and the unemployment rate steady at 3.9 percent.

Monthly job gains have averaged about 179,000 over the last three months, more than the roughly 120,000 needed to keep up with growth in the working-age population. Though the labor market is viewed as being close to or at full employment, there is still some slack remaining.

The labor force participation rate, or the proportion of working-age Americans who have a job or are looking for one, fell to 62.7 percent last month from 62.8 percent in April. It has declined for three straight months.

Still, the labor market is getting tighter. A broader measure of unemployment, which includes people who want to work but have given up searching and those working part-time because they cannot find full-time employment, fell to 7.6 percent last month, the lowest since May 2001, from 7.8 percent in April.

With job growth expected to slow as employers struggle to find qualified workers, economists expected wage growth will pick up significantly.

The Fed’s latest Beige Book report of anecdotal information on business activity collected from contacts nationwide showed labor market conditions remained tight across the country in late April and early May. The Fed said contacts continued to report difficulty filling positions across skill levels.

There were notable shortages of truck drivers, sales personnel, carpenters, electricians, painters, and information technology professionals, the central bank said in its report published on Wednesday.

Job gains in May were across all sectors. Construction payrolls increased by 25,000 after rising by 21,000 jobs in April. Construction employment fell in March for the first time in eight months.

Manufacturers added another 18,000 jobs last month on top of the 25,000 created in April. Further gains are likely, with a survey from the Institute for Supply Management on Friday showing a pickup in factory activity in May. But some manufacturers said the steel tariffs were pushing up prices.

Government payrolls increased by 5,000, reversing April’s 3,000 drop. Retailers boosted employment by 31,100 jobs last month. Employment in the leisure and hospitality sector increased by 21,000 jobs.

(Reporting by Lucia Mutikani; Editing by Andrea Ricci)

U.S. jobless claims rise; continuing claims lowest since 1973

FILE PHOTO: People wait in line to attend TechFair LA, a technology job fair, in Los Angeles, California, U.S., January 26, 2017. REUTERS/Lucy Nicholson/File Photo

WASHINGTON (Reuters) – New applications for U.S. unemployment benefits increased more than expected last week, but the number of Americans on jobless rolls fell to its lowest level since 1973, pointing to tightening labor market conditions.

Initial claims for state unemployment benefits rose 24,000 to a seasonally adjusted 242,000 for the week ended March 31, the Labor Department said on Thursday. Data for the prior week were revised to show 3,000 more claims received than previously reported.

Economists polled by Reuters had forecast claims rising to 225,000 in the latest week. Last week’s increase likely reflected difficulties adjusting the data around moving holidays like Easter and school spring breaks.

The labor market is considered to be near or at full employment. The jobless rate is at a 17-year low of 4.1 percent, not too far from the Federal Reserve’s forecast of 3.8 percent by the end of this year.

The Labor Department said claims for Maine and Colorado were estimated last week. It also said claims-taking procedures in Puerto Rico and the Virgin Islands had still not returned to normal after the territories were devastated by Hurricanes Irma and Maria last year.

The four-week moving average of initial claims, viewed as a better measure of labor market trends as it irons out week-to-week volatility, rose 3,000 to 228,250 last week.

The claims data has no bearing on March’s employment report, which is scheduled for release on Friday. According to a Reuters survey of economists, nonfarm payrolls probably increased by 193,000 jobs in March. The unemployment rate is forecast falling one-tenth of a percentage point to 4.0 percent.

Economists are optimistic that tightening labor market conditions will start boosting wage growth in the second half of this year. That should help to support consumer spending, which slowed at the start of the year.

The claims report also showed the number of people receiving benefits after an initial week of aid fell 64,000 to 1.81 million in the week ended March 24, the lowest level since December 1973. The four-week moving average of the so-called continuing claims dropped 13,500 to 1.85 million, the lowest reading since January 1974.

(Reporting by Lucia Mutikani; Editing by Andrea Ricci) ((Lucia.Mutikani@thomsonreuters.com; 1 202 898 8315; Reuters Messaging: lucia.mutikani.thomsonreuters.com@reuters.net)

Americans job market tightening, inflation steadily rising

FILE PHOTO: A help wanted sign is posted on the door of a gas station in Encinitas California

By Lucia Mutikani

WASHINGTON (Reuters) – The number of Americans filing for unemployment benefits fell last week, pointing to sustained labor strength even as economic growth appears to have slowed early in the first quarter.

Other data on Thursday showed a rise in the prices of imported goods in February amid U.S. dollar weakness, bolstering expectations that inflation will pick up this year. Labor market strength and a steady increase in price pressures could allow the Federal Reserve to raise interest rates next week.

Initial claims for state unemployment benefits dropped 4,000 to a seasonally adjusted 226,000 for the week ended March 10, the Labor Department said on Thursday. Claims decreased to 210,000 during the week ended Feb. 24, which was the lowest level since December 1969.

Last week’s drop in claims was in line with economists’ expectations. It was the 158th straight week that claims remained below the 300,000 threshold, which is associated with a strong labor market. That is the longest such stretch since 1970, when the labor market was much smaller.

Fed officials consider the labor market to be near or a little beyond full employment. The unemployment rate is at a 17-year low of 4.1 percent.

The economy created 313,000 jobs in February. Economists are optimistic that tightening labor market conditions will boost wage growth in the second half of this year.

That should help to underpin consumer spending, which slowed at the start of the year. Data on Wednesday showed retail sales fell in February for a third straight month.

Gross domestic product growth estimates for the first quarter are as low as a 1.7 percent annualized rate. Reports on home sales and industrial production in January have also been weak. The economy grew at a 2.5 percent pace in the fourth quarter.

The U.S. dollar gained against a basket of currencies after Thursday’s data while U.S. stock index futures moved higher. Prices of U.S. Treasuries were trading mostly lower. Diminishing labor market slack is also expected to help boost inflation toward the U.S. central bank’s 2 percent target.

IMPORTED CAPITAL GOODS PRICES RISE

In another report, the Labor Department said import prices increased 0.4 percent last month after accelerating 0.8 percent in January. That lifted the year-on-year increase in import prices to 3.5 percent from January.

Last month, prices for imported capital goods jumped 0.6 percent. That was the biggest increase since April 2008 and followed an unchanged reading in January.

Prices of imported consumer goods excluding automobiles rose 0.5 percent, the largest gain since January 2014, after edging up 0.1 percent in the prior month. These price increases likely reflected the dollar’s depreciation against the currencies of the United States’ main trading partners, and will eventually filter through to core producer and consumer inflation.

Imported petroleum prices fell 0.5 percent in February, the first drop in seven months, after rising 3.0 percent in January. Import prices excluding petroleum surged 0.5 percent after a similar gain in January.

The price of goods imported from China rose 0.2 percent. Prices for imports from China increased 0.3 percent in the 12 months through February, the biggest advance since June 2014.

(Reporting by Lucia Mutikani; Editing by Paul Simao)

U.S. economy gains 313,000 jobs in February; wage growth slows

Job seekers and recruiters gather at TechFair in Los Angeles, California, U.S. March 8, 2018. REUTERS/Monica Almeida

By Lucia Mutikani

WASHINGTON (Reuters) – U.S. job growth surged in February, recording its biggest increase in more than 1-1/2 years, but a slowdown in wage gains pointed to only a gradual increase in inflation this year.

Nonfarm payrolls jumped by 313,000 jobs last month, boosted by the largest rise in construction jobs since 2007, the Labor Department said on Friday. The payrolls gain was the biggest since July 2016 and triple the roughly 100,000 jobs the economy needs to create each month to keep up with growth in the working-age population.

The labor market is benefiting from strong domestic demand, an improvement in global growth as well as robust U.S. business sentiment following the Trump administration’s $1.5 trillion income tax cut package that come into effect in January.

Average hourly earnings edged up four cents, or 0.1 percent, to $26.75 in February, a slowdown from the 0.3 percent rise in January. That lowered the year-on-year increase in average hourly earnings to 2.6 percent from 2.8 percent in January.

The unemployment rate was unchanged at a 17-year low of 4.1 percent in February for a fifth straight month as 806,000 people entered the labor force in a sign of confidence in the job market. The average workweek rebounded to 34.5 hours after falling to 34.4 hours in January.

With Federal Reserve officials considering the labor market to be near or a little beyond full employment, the moderation in wage growth last month did little to change the view that the U.S. central bank will raise interest rates at its March 20-21 policy meeting.

Slow wage growth, however, could temper expectations the Fed will raise its rate forecast to four hikes this year from three. There is optimism that tightening labor market conditions will spur faster wage growth this year and pull inflation toward the Fed’s 2 percent target.

“While the employment gains unequivocally suggest underlying strength in the economy, wage gains remain muted enough for the Fed to continue with an only gradual normalization of the policy stance. Stock markets are reacting accordingly,” said Harm Bandholz, chief U.S. economist at UniCredit Bank in New York.

Speculation that the central bank would upgrade its rate projections was stoked by Fed Chairman Jerome Powell when he told lawmakers last week that “my personal outlook for the economy has strengthened since December.”

While Powell said there was no evidence of the economy overheating, he added “the thing we don’t want to have happen is to get behind the curve.”

Economists polled by Reuters had forecast payrolls rising by 200,000 jobs last month and the unemployment rate falling to 4.0 percent. Average hourly earnings had been expected to increase 0.2 percent in February.

Data for December and January was revised to show the economy adding 54,000 more jobs than previously reported.

U.S. stock indexes opened higher after the data while prices of U.S. Treasuries were trading lower. The dollar was largely unchanged against a basket of currencies.

CONSTRUCTION SHINES

Some companies like Starbucks Corp and FedEx Corp have said they would use some of their windfall from a tax cut package to boost workers’ salaries. Walmart announced an increase in entry-level wages for hourly employees at its U.S. stores effective in February.

The employment report suggested the economy remained strong despite weak consumer spending, home sales, industrial production and a wider trade deficit in January that prompted economists to lower their first-quarter growth estimates. Gross domestic product estimates for the January-March quarter are around a 2 percent annualized growth rate. The economy grew at a 2.5 percent pace in the fourth quarter.

The full impact of the tax cuts and a planned increase in government spending has yet to be felt, and a robust job market could heighten fears of the economy overheating.

“The economy is simply too strong,” said Chris Rupkey, chief economist at MUFG in New York. “There’s no reason whatsoever for the Federal Reserve to have a stimulative monetary policy at this stage of the business cycle.”

Economists expect the unemployment rate to fall to 3.5 percent this year. A broader measure of unemployment, which includes people who want to work but have given up searching and those working part-time because they cannot find full-time employment, was unchanged at 8.2 percent last month.

The labor force participation rate, or the proportion of working-age Americans who have a job or are looking for one, rose three-tenths of a percentage point to a five-month high of 63.0 percent in February.

An even broader gauge of labor market health, the percentage of working-age Americans with a job, increased to 60.4 percent last month from 60.1 percent in January.

Employment gains were led by the construction sector, which added 61,000 jobs, the most since March 2007. Hiring at construction sites was likely boosted by unseasonably mild temperatures in February.

Manufacturing payrolls increased by 31,000 jobs, rising for a seventh straight month. The sector is being supported by strong domestic and international demand as well as a weaker dollar. Retail payrolls jumped by 50,300, the largest increase since February 2016.

The Labor Department said that was because on an unadjusted basis the sector hired fewer workers than usual for the holiday season and did not shed many jobs after the holidays. As a result, retail employment rose after the seasonal adjustment, the department said.

Government employment increased by 26,000 jobs last month, with hiring of teachers by local governments accounting for the bulk of the rise. There were also increases in payrolls for professional and business services, leisure and hospitality as well as healthcare and social assistance.

Financial sector payrolls increased by 28,000 last month, the most since October 2005.

(Reporting by Lucia Mutikani; Editing by Andrea Ricci and Paul Simao)

Americans voluntarily quitting jobs as labor market tightens

: A help wanted sign is posted on the door of a gas station in Encinitas, California, U.S., September 6, 2013.

By Lucia Mutikani

WASHINGTON (Reuters) – The number of American workers voluntarily quitting their jobs jumped in December to the highest level in nearly 17 years, in a strong show of confidence in the labor market which further bolsters expectations of faster wage growth this year.

The Labor Department’s monthly Job Openings and Labor Turnover Survey (JOLTS) report published on Tuesday came on the heels of news last week that annual wage growth in January was the strongest in more than 8-1/2 years. The labor market is almost at full employment.

The number of workers willingly leaving their jobs increased by 98,000 to 3.259 million, the highest level since January 2001. That lifted the quits rate to a 2.2 percent from 2.1 percent in November. This rate, which the Federal Reserve looks at as a measure of job market confidence, has rebounded from a low of 1.3 percent in late 2009.

“I had thought that by now, the fear of moving to another company would have faded,” said Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania. “It really hadn’t very much, though maybe it is finally happening.”Rising job turnover boosts economists’ optimism that wage growth will accelerate this year and in turn help to push inflation toward the Fed’s 2 percent target. While economists remain confident that the U.S. central bank will increase interest rates at least three times this year, much would depend on the fortunes of the U.S. stock market.

Stocks on Wall on Monday recorded their biggest drop since August 2011 as concerns over rising U.S. interest rates and government bond yields hit record-high valuations of stocks.

“The data today are likely to keep the Fed on the path of gradual rate hikes this year as long as the stock market stabilizes from its death plunge the last two weeks,” said Chris Rupkey, chief economist at MUFG in New York.

“Labor market conditions are picture perfect today, but that can change in a hurry if worsening financial conditions and plunging markets take a toll on business confidence.”

The JOLTS report also showed that job openings, a measure of labor demand, decreased 167,000 to a seasonally adjusted 5.8 million. Still, job openings are not too far from a record high of 6.2 million touched in September.

The decline in job openings in December was led by the professional and business services sector, which saw a decrease of 119,000. Job openings in the retail trade sector fell 85,000 while vacancies in construction dropped 52,000.

But job openings in the information sector increased 33,000 and the federal government had an additional 13,000 vacancies in December. The jobs openings rate slipped one-tenth of a percentage point to 3.8 percent in December.

Hiring was little changed at 5.49 million.

“The recent moderation across much of the JOLTS data is not alarming to us given that levels still remain favorable across much of the data and that we have been expecting the pace of job growth to cool relative to the recent strong gains,” said Daniel Silver, an economist at JPMorgan in New York.

(Reporting by Lucia Mutikani; Editing by Andrea Ricci)

U.S. hiring accelerates; annual wage growth strongest since 2009

Job seekers line up to apply during "Amazon Jobs Day," a job fair being held at 10 fulfillment centers across the United States aimed at filling more than 50,000 jobs, at the Amazon.com Fulfillment Center in Fall River, Massachusetts, U.S., August 2, 2017.

By Lucia Mutikani

WASHINGTON (Reuters) – U.S. job growth surged in January and wages increased further, recording their largest annual gain in more than 8-1/2 years, bolstering expectations that inflation will push higher this year as the labor market hits full employment.

Nonfarm payrolls jumped by 200,000 jobs last month after rising 160,000 in December, the Labor Department said on Friday.

The unemployment rate was unchanged at a 17-year low of 4.1 percent. Average hourly earnings rose 0.3 percent in January to $26.74, building on December’s solid 0.4 percent gain.

That boosted the year-on-year increase in average hourly earnings to 2.9 percent, the largest rise since June 2009, from 2.7 percent in December. Workers, however, put in fewer hours last month. The average workweek fell to 34.3 hours, the shortest in four months, from 34.5 hours in December.

The robust employment report underscored the strong momentum in the economy, raising the possibility that the Federal Reserve could be a bit more aggressive in raising interest rates this year. The U.S. central bank has forecast three rate increases this year after raising borrowing costs three times in 2017.

“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, investment strategist at Aberdeen Standard Investments.

Fed officials on Wednesday expressed optimism that inflation will rise toward its target this year. Policymakers, who voted to keep interest rates unchanged, described the labor market as having “continued to strengthen,” and economic activity as “rising at a solid rate.”

U.S. financial markets expect a rate hike in March. The dollar rose against a basket of currencies on the data. Prices for U.S. Treasuries fell, with the yield on the benchmark 10-year note rising to a four-year high. U.S. stock index futures slightly extended losses.

Economists say job gains are being driven by buoyant domestic and global demand.

Given that the labor market is almost at full employment, economists saw little boost to job growth from the Trump administration’s $1.5 billion tax cut package passed by the Republican-controlled U.S. Congress in December, in the biggest overhaul of the tax code in 30 years.

President Donald Trump and his fellow Republicans have cast the fiscal stimulus, which includes a reduction in the corporate income tax rate to 21 percent from 35 percent, as creating jobs and boosting economic growth.

According to outplacement consultancy firm Challenger, Gray & Christmas, only seven companies, including Apple, had announced plans to add roughly a combined 37,000 new jobs in response to the tax cuts as of the end of January.

Economists polled by Reuters had forecast nonfarm payrolls rising by 180,000 jobs last month and the unemployment rate unchanged at 4.1 percent. January’s jobs gains were above the monthly average of 192,000 over the past three months.

The economy needs to create 75,000 to 100,000 jobs per month to keep up with growth in the working-age population.

JOB GAINS SEEN SLOWING

Job growth is expected to slow this year as the labor market hits full employment. Companies are increasingly reporting difficulties finding qualified workers, which economists say will force some to significantly raise wages as they compete for scarce labor.

Wage growth last month was likely supported by increases in the minimum wage which came into effect in 18 states in January. They probably also got a lift from the tax cut. Companies like Starbucks Corp and FedEx Corp have said they will use some of the savings from lower taxes to boost wages for workers.

Further gains are expected in February when Walmart raises entry-level wages for hourly employees at its U.S. stores. Annual wage growth is now close to the 3 percent that economists say is needed to push inflation towards the Fed’s 2 percent target.

The January household survey data incorporated new population controls. The department also released annual revisions to the payrolls data from the survey of employers and introduced new factors to adjust for seasonal fluctuations.

It said the level of employment in March of last year was 146,000 higher than it had reported, on a seasonally adjusted basis. The unemployment rate dropped seven-tenths of a percentage point in 2017 and economists expect it to hit 3.5 percent by the end of the year.

Employment gains were widespread in January. Manufacturing payrolls increased by 15,000 last month after rising 21,000 in December. The sector is being supported by strong domestic and international demand. A weak dollar is also providing a boost to manufacturing by making U.S.-made goods more competitive on the international market.

Hiring at construction sites picked up last month despite unseasonably cold weather. Construction payrolls increased by 36,000 jobs after rising 33,000 in December. Retail employment rebounded by 15,400 jobs in January after slumping 25,600 the prior month.

Government employment increased by 4,000 jobs following two straight months of declines. There were also increases in payrolls for professional and business services, leisure and hospitality as well as healthcare and social assistance.

(Reporting by Lucia Mutikani; Editing by Andrea Ricci)