US 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 Labour 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.

At 423,000, November’s payroll gains were the largest since May 2010, when employment was boosted by government hiring for the population count.

While the unemployment rate rose one-tenth of a percentage point to 5.7 per cent, that was because the labor force increased, a sign of confidence in the jobs market.

January marked the 11th straight month of job gains above 200,000, the longest streak since 1994.

The continued improvement in the labor market comes despite the economy slowing. Sputtering growth overseas and lower oil prices have weighed on exports and business investment.

Wages increased 12 cents last month after falling five cents in December. That took the year-on-year gain to 2.2 per cent, the largest since August.

Interest rate hike expectations had been dialed back to September in the wake of December’s surprise drop in wages.

The Fed last week ramped up its assessment of the labor market. Brisk job gains and the improvement in wages could harden expectations of a June policy tightening.

The pick-up in wages is likely to combine with lower oil prices to provide a massive tailwind for consumer spending and keep the economy growing at a fairly healthy clip, despite the global turmoil.

Growth braked to a 2.6 per cent annual rate in the fourth quarter.

While several states put in place higher minimum wages last month, that likely had a minimal impact on wages. Economists say roughly three million workers may have been affected, accounting for just 3 per cent of the private sector’s more than 118 million employees.

The government revised payroll employment, hours and earnings figures dating back to 2010. The level of employment in March 2014 was 91,000 higher than previously estimated.

A new population estimate that will be used to adjust the figures from its household survey was also introduced. That survey is used to determine the number of unemployed and the size of the workforce.

Away from the firmer wages and job growth, the labor force participation rate, or the share of working-age Americans who are employed or at least looking for a job, rose two-tenths of percentage point to 62.9 per cent, 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 per cent from 11.2 per cent 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.

Manufacturing added 22,000 jobs in January. Construction payrolls increased 39,000 after rising 44,000 in December.

Retail employment increased 45,900 after braking sharply in December. The only areas of weakness were government, where payrolls fell 10,000, and transportation employment which dropped 8,600, the first drop since last February.

Temporary help fell 4,100, the first drop in a year.

The average workweek was steady at 34.6 hours.

Reuters