WASHINGTON: The first employment report since Donald Trump began his presidency showed the economy chugging along at a healthy pace. Companies added 227,000 jobs in January, according to government data released Friday. The pace of hiring surpassed the expectations of economists surveyed by Bloomberg, who had forecast an increase of 175,000 in nonfarm payrolls, roughly in line with gains in the previous year.

The unemployment rate ticked up to 4.8 per cent, as more people joined the workforce to look for jobs.

Wages rose by 3 cents to $26, following a 6-cent increase in December. That increase came as somewhat of a disappointment, and suggested that the US economy still has room to grow before almost all workers who want a job can find one.

“The Fed and economists have been thinking that since we’re starting to approach full employment, we would see more of an increase in wages, and we’re just not seeing that yet,” said Scott Anderson, chief economist at Bank of the West Economics. “We think it’s coming, it’s just not quite here yet.”

The retail, construction and financial industries accounted for much of the hiring last month. The Labor Department also revised its estimates for job creation in November and December, reducing the total number of jobs in those months by 39,000.

Investors have looked kindly on Trump’s pledges to slash taxes, reduce regulations and pump money into infrastructure through tax credits, believing they are likely to boost economic growth. Stock markets have rallied since the election, with the blue-chip Dow Jones Industrial Average and the tech-heavy Nasdaq both gaining more than 5 per cent, and the broader Standard & Poor’s 500-stock index rising 4.5 per cent.

Since taking office two weeks ago, President Trump has delivered a whirlwind of executive orders banning entrants from seven majority-Muslim countries, freezing regulations and government hiring, and ordering federal agencies to loosen their enforcement of Obamacare, among other actions.

Tom Gimbel, founder and chief executive of the staffing and recruiting firm LaSalle Network, said he had seen expectations for Trump to benefit the business sector taper somewhat in recent weeks. But overall, companies remain positive about the direction of the economy and the policy changes Trump vows to make. “The CEOs, chief financial officers and heads of human resources that we’re talking to are still very bullish,” said Gimbel.

“If you’re a CEO, you may be licking your chops anticipating reduced regulations. But on the other hand, you’re looking over your shoulder wondering if you’re going to be the next target of a tweet,” said Mark Hamrick, senior economic analyst for Bankrate.com.

For workers, a strengthening economy also appears to be delivering wage gains, although not as quickly as some economists have expected.

Average hourly earnings rose only 2.5 per cent in January from with the year prior, slower than the 2.8 per cent growth seen in December. That surprised some analysts, who had expected minimum-wage increases that went into effect in 19 states in January to push up worker pay.

Given a strong labour market but relatively tepid wages gains and inflation, the Federal Reserve is closely watching to see whether it should continue gradually tightening monetary policy this year.

At a meeting earlier this week, the Federal Reserve choose to leave its benchmark interest rate unchanged, following a rate hike in December. The central bank has indicated that it will make three rate increases in 2017, though futures markets suggest the Fed will once again leave the rate unchanged when it meets in March. Instead, investors are expecting hikes in June and December.

Data released on Friday reinforced those expectations, said Kevin Logan, chief economist at HSBC. “At the margin, it lowered the expectation that the Fed would tighten three times. Why? Without the wage pressure, inflation may stay below their target, and that gives them room to wait. It gives them breathing room.”

The Fed has said that the pace of rate hikes will hinge on the health of the economy, and has indicated that it is closely watching to see whether tax cuts or spending increases under the Trump administration end up boosting economic growth or inflation. However, economists now say that those policies seem unlikely to affect the economy until late 2017, at the earliest.

“They would hike rates in response to whether the economy’s momentum was strong and had the potential to create inflationary pressures,” said Beata Caranci, chief economist at TD Economics. “So if you have fiscal policy that strengthens growth, you’re likely to get a policy response.”

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