Even in January, the job market was heating up.
Employers added 227,000 positions in the month, which was significantly higher than forecast. The jobs gains come as elsewhere there are signs that some of the optimism around Donald Trump’s economic proposals seemed to fade. The stock market rally has slowed, and the Federal Reserve has signaled it would go slower on raising interest rates.
January’s unemployment rate rose slightly to 4.8%. But that’s unlikely to worry investors given the considerably better-than-expected payroll improvement. The number was 52,000 more jobs than economists have been looking for. And it was significantly higher than the 157,000 jobs that were added in December. Retailers added the most jobs of any sector, up 46,000. And despite the weather, official numbers for construction employment were up as well for a gain of 36,000, but some of that increase is sure to be due to seasonal adjustments.
Despite the strong job growth, wage gains slowed. In January, wages were up just 2.5% from a year ago. That’s slower than the 2.9% in December. Many economists have attributed slow wage gains as the reason why a good portion of Americans think the economy is weak, even though the unemployment rate has been below 5%—an historically low figure—for some time.
The good jobs report could cause some issues for President Trump’s efforts to push through his policy proposals. Trump has called for tax cuts and infrastructure spending to boost the economy, which he has characterized as a disaster. But the strong increase in jobs in January may make it harder to continue to make that case and to prove that his stimulus efforts are needed.
Friday’s stronger then-than-expected jobs number could also cause some issues for the Fed. The U.S. central bank’s indication that it would go slower on raising interest rates, was seen by many as a fear that uncertainty around Trump’s policy proposals were adding risk to the economy. But with a stronger-than-expected jobs report, the Fed may have to push rates up, instead of waiting to see how the Trump economy will unfold.