US labour market enjoys biggest gain in 17 years

The US labour market leaped forward in January, capping the greatest three-month jobs gain in 17 years and delivering the biggest wage increase since 2008.

Payrolls advanced by 257,000 last month following increases in December and November that were even bigger than previously reported, figures from the Labor Department showed in Washington. The unemployment rate rose to 5.7% from 5.6% as more than a million Americans streamed into the labour force seeking work.

The sustained employment gains are creating a virtuous cycle as Americans spend newfound incomes on goods and services.

The growth in jobs will probably help assure the Federal Reserve policy makers that the expansion is well-rooted and can withstand an increase in interest rates later this year.

“These are pretty amazing numbers,” said Nariman Behravesh, chief economist at IHS Inc.

Average hourly earnings jumped 0.5%, the most since November 2008, from the prior month. They were up 2.2% over the past year, the biggest advance since August.

Payroll gains averaged 336,000 over the last three months, the strongest since a comparable period ended in November 1997.

A striking aspect of the report was an upward revision to prior months.

* Bloomberg