The economy added 200,000 new jobs and the unemployment rate held steady at 4.1 percent in January, the Department of Labor reported Friday, as job creation bounced back to a robust pace.
Economists had expected job growth to pick up to about 175,000.
In recent months job growth has run at about double what would be necessary to keep up with population growth, even as the jobs recovery has stretched past the seven-year mark. With revisions, the past three months have averaged 192,000 monthly payroll jobs, adjusted for seasonal fluctuations.
Unemployment is already lower than anytime since the dotcom bubble, but there are few signs of employment growth petering out or even slowing down.
The best news from the report, though, was that average hourly earnings grew at a 2.9 percent annual pace, the best such mark since 2009.
Friday’s report raises the question of just how many more workers there are who could fill positions in the months ahead, and whether January marked the beginning of faster wage gains driven by employers being forced to bargain harder for workers.
"Could we see wage growth break through the 3 percent barrier? That’s a key question for the coming months," said Mark Hamrick, Bankrate.com's senior economic analyst. "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."
For its part, the Federal Reserve, newly headed by Trump appointee Jerome Powell as of Monday, is likely to interpret the latest jobs numbers as a sign that another interest rate target hike is needed in March to prevent inflation from rising too fast.
And the Trump administration will receive a boost from the wage numbers in particular. President Trump and congressional Republicans have said that the tax cuts they enacted were geared toward encouraging wage growth, and that they also want to maintain a high pace of hiring in order to bring people off the sidelines and into the workforce.
"Our tax plan is driving real wage growth. It’s driving a better economy," White House adviser Gary Cohn said Friday morning on Fox Business.
The latest numbers include some signs that there could be more "shadow unemployed" — people interested in seeking work who aren’t captured in the unemployment rate. For instance, the total employment to population ratio remains below its pre-recession levels.
At the same time, the labor force participation rate has remained steady over the past four years, despite ongoing demographic pressures, such as the retirement of the Baby Boomer generation, that are expected to drive it further down in the years ahead.
And, in some parts of the country at least, companies are having trouble finding eligible workers and are trying new ways to get people outside of the workforce to consider filling positions.
In Wisconsin, for instance, where unemployment is just 3 percent, some manufacturers are reaching out to veterans, offering training if they’ll work for them. In Southwest Florida, a large construction company desperate for workers is offering full-time work with benefits to workers who can complete a six-week course.
The construction sector maintained strong hiring in January, adding 36,000 new jobs, according to the survey of establishments. Manufacturing employment, too, maintained an upward trajectory, growing by 15,000. Over the past year, the country has created 186,000 new manufacturing jobs.
Health care and restaurants also saw strong hiring in January. No sectors suffered big job losses.