(Reuters) - U.S. job growth rose solidly in January and wages rebounded strongly, a show of underlying strength in the economy that puts a mid-year interest rate increase from the Federal Reserve back on the table.
*Nonfarm payrolls increased 257,000 last month, the Labor Department said on Friday. Data for November and December was revised to show a whopping 147,000 more jobs created than previously reported, bolstering views consumers will have enough muscle to carry the economy through rough seas.
*While the unemployment rate rose one-tenth of a percentage point to 5.7 percent, that was because the labor force increased, a sign of confidence in the jobs market.
*A broad measure of joblessness that includes people who want to work but have given up searching and those working part-time because they cannot find full-time employment rose to 11.3 percent from 11.2 percent in December.
*In January, private payrolls increased 267,000. November and December private employment was revised higher. Private payroll gains in November were the largest since September 1997.
MOHAMED EL-ERIAN, CHIEF ECONOMIC ADVISER AT ALLIANZ, NEWPORT BEACH, CALIF.:
“The strong across-the-board employment report confirms the American economy’s ability to create jobs, draw more people into the labor market and, finally, improve prospects for wage growth. With the improvements extending beyond robust job growth to include higher wages and labor participation, this job report speaks to better prospects for durable and inclusive growth.”
JIM PAULSEN, CHIEF INVESTMENT OFFICER, WELLS CAPITAL MANAGEMENT, MINNEAPOLIS:
“The job gains are getting really impressive here. Manufacturing jobs are up, hourly earnings snapping back, an increase in labor force participation rate, it’s a universally good report.
A report like this one would be positive for equities elsewhere “but in the United States it is becoming a mixed bag. It moves the window for the Fed (to raise rates) back to the summer and maybe even sooner. Futures are up but not by that much. It introduces the idea of margin erosion, wages accelerate but corporations can’t keep up with price hikes. There’s a lot here to digest for equity investors.
“The Fed’s argument is disintegrating under its feet. The Fed is losing its argument that it should maintain a zero percent rate.”
JEFFREY SAUT, CHIEF INVESTMENT STRATEGIST, RAYMOND JAMES FINANCIAL, ST. PETERSBURG, FLORIDA:
“The underlying economy is stronger than a lot of figures suggest. If you travel like I do around the country you see it. Negative nabobs keep saying it’s all done with Fed liquidity. But the fact of the matter is this thing has pretty much morphed itself into a pretty decent, sustainable, at least it looks like to me, recovery.
“The nonfarm printed at 257,000 versus I think the expectation was 230,000. The big deal I think is in the revision. The prior was revised was up to 329,000 from 252,000 and I like this, the change in the manufacturing payrolls were 22,000 versus 12,000 expectations, and here to the revision to the prior number was 26,000 up from 17,000.”
JIM KOCHAN, CHIEF FIXED-INCOME STRATEGIST AT WELLS FARGO FUNDS MANAGEMENT, LLC, MENOMONEE FALLS, WISCONSIN:
“These are very strong employment data. Much larger increases in payroll jobs the last three months than we had thought or expected. The three-month average is now 336,000 per month. The increase in the unemployment rate is meaningless. The labor force is estimated to have increased by more than a million - that is impossible. Household employment increased 759,000 and that three-month average is 314,000 per month. Very impressive. Finally the 0.5 percent increase in average hourly earnings more than offset the drop in December. This report will probably reignite expectations that the Fed will begin the ‘policy normalization’ process in June-July.”
TOM PORCELLI, CHIEF US ECONOMIST, RBC CAPITAL MARKETS, NEW YORK:
“By any measure this was an extremely good report. The state of the consumer remains extremely constructive in the United States and the wage numbers throughout have been consistent with that idea. This report continues to add evidence that the consumer has the potential to continue to move along at this very constructive pace.
“I don’t think one report will sway the Fed one way or the other, but I do think it adds some additional evidence for those folks wondering what the fate of wages is going to be, that you probably are looking at some modest wage pressures here.”
MARK GRANT, MANAGING DIRECTOR AT SOUTHWEST SECURITIES, FORT LAUDERDALE, FLORIDA:
“The headline numbers that are showing are somewhat better for employment. Since they keep fiddling with these numbers and telling us how many people have left the workforce, I don’t fully trust the figures. I honestly don’t think the Fed will do anything for the entire year. They will be forced by deflationary pressures, the problems in Europe and the slowdown in China. The headline figure looks good but the Fed’s hands are going to be tied.”
TODD SCHOENBERGER, MANAGING PARTNER OF LANDCOLT CAPITAL LP IN NEW YORK:
“The number is spectacular, and it really validates the trend that we saw in the final four months of last year. We’re continuing to see solid jobs growth, but it won’t move the needle for the Fed. The Fed will dissect this to see how many of the jobs created were high-wage, but since the unemployment rate popped a bit – though that’s probably due to seasonal hiring – this is enough to keep the Fed in check. It will probably put more pressure on Fed meetings during the summer, but for now all systems are go. This is a great reason to buy, especially since the stock market is the only place you can find yield right now.”
STOCKS: U.S. stock index futures rose modestly on the reportBONDS: U.S. bond prices fell FOREX: The dollar gained against other major currencies
Americas Economics and Markets Desk; +1-646 223-6300