It’s not the blockbuster predicted by ADP and Mark Zandi, but the latest Bureau of Labor Statistics jobs report isn’t a flop either. The US economy added 200,000 jobs in January, falling short of ADP but still beating market expectations:

Total nonfarm payroll employment increased by 200,000 in January, and the unemployment rate was unchanged at 4.1 percent, the U.S. Bureau of Labor Statistics reported today. Employment continued to trend up in construction, food services and drinking places, health care, and manufacturing. …

In January, the unemployment rate was 4.1 percent for the fourth consecutive month. The number of unemployed persons, at 6.7 million, changed little over the month.

BLS revised the job creation numbers over the last two months, the net effect of which was to lower the number by 24,000. Those adjustments brought the three-month average on job creation to 192,000 a month, a respectable but hardly spectacular number. The U-3 unemployment rate remained essentially unchanged for the third straight month, but not among African-Americans, where it went from 6.8% to 7.7%, its highest level in a year. Donald Trump had bragged during his State of the Union address on Tuesday night about achieving a record low in this metric; expect to see some focus on this reversal from the media, and especially from members of Congress who were already dismissive of this claim.

The other indicators in this report look positive, although one can argue about how much sunniness to take from it. Most of the job creation took place in service industries, with education and health services the biggest gainer (38K), followed closely by leisure and hospitality (35K). Manufacturing added 15,000 jobs last month, slowing its expansion over the past three months. Construction did better with 36,000 added jobs, demonstrating a consistent demand for expansion of business and residential facilities, a good sign especially in the winter months.

The growth in wages in 2017, however, outshines the pedestrian job addition levels:

In January, average hourly earnings for all employees on private nonfarm payrolls rose by 9 cents to $26.74, following an 11-cent gain in December. Over the year, average hourly earnings have risen by 75 cents, or 2.9 percent. Average hourly earnings of private-sector production and nonsupervisory employees increased by 3 cents to $22.34 in January.

Most of this growth took place in the second half of 2017; roughly a third of that increase took place by June (26 cents). That’s a point which Trump will no doubt emphasize as a result of his economic and deregulatory policies. It’s also the first indication since the Great Recession that the labor market is actually getting competitive. One potential sour note emerged in the report, however — even as wages climbed, hours worked dropped slightly to their lowest level in a year, 34.3 per week from 34.5 the last two months and 34.4 last January.

As Reuters notes, it’s the biggest rise in wages since the end of the financial crisis:

That boosted the year-on-year increase in average hourly earnings to 2.9 percent, the largest rise since June 2009, from 2.7 percent in December. Workers, however, put in fewer hours last month. The average workweek fell to 34.3 hours, the shortest in four months, from 34.5 hours in December.

The robust employment report underscored the strong momentum in the economy at the start of the year. Economists say job gains are being driven by buoyant domestic and global demand.

If that’s the case, though, Reuters’ Lucia Mutikani wonders whether we really needed the tax cuts passed in December:

Given that the labor market is almost at full employment, economists saw little boost to job growth from the Trump administration’s $1.5 billion tax cut package passed by the Republican-controlled U.S. Congress in December, in the biggest overhaul of the tax code in 30 years.

President Donald Trump and his fellow Republicans have cast the fiscal stimulus, which includes a reduction in the corporate income tax rate to 21 percent from 35 percent, as creating jobs and boosting economic growth.

According to outplacement consultancy firm Challenger, Gray & Christmas, only seven companies, including Apple, had announced plans to add roughly a combined 37,000 new jobs in response to the tax cuts as of the end of January.

True, but more companies have announced plans to repatriate overseas earnings to the US in some form. That will most likely fund reinvestment in their domestic operations, which will create jobs down the road, and that will produce competitive pressure on wages as employers seek scarcer labor resources. In the short term, a significantly larger number of companies than just seven have committed to unscheduled bonuses, wage hikes, or both in the wake of the tax reform bill. Don’t expect workers to overlook those benefits, and look past the press releases to the actions to come over the next several months.

The Associated Press’ Christopher Rugaber points out that the future indicators look bright indeed:

The pay gains suggest that employers are increasingly competing for a limited pool of workers. Raises stemming from Republican tax cuts and minimum wage increases in 18 states also likely boosted pay last month. …

Most other recent economic data have also been encouraging. Factories, for example, expanded rapidly in January, according to a survey of purchasing managers, in part because a weaker U.S. dollar and solid growth overseas have boosted U.S. exports.

And many Americans appear confident enough to buy homes: Sales of existing houses reached their highest level in 11 years in 2017. At the same time, would-be buyers are struggling to find suitable homes because so few properties are available for sale. The demand for housing helped lift home building in 2017 to its fastest pace in a decade. Construction companies added 210,000 jobs last year, the most in two years.

Overall, this report is more encouraging than its job creation numbers alone would justify. We should keep an eye on hours worked and watch to see if the wage boost in January was a temporary artifact of the tax-reform bonuses and wage hikes. If wage growth continues, it will signal that we finally reached our post-Great Recession floor on workforce participation and may start finding our way back to a more normal employment environment.