Feb 18, 2016 04:20 AM EST

US Unemployment Rate Falls – Wages On The Rise

Recent developments indicate that US wages are finally going up. After many years of slight increases, wages of American workers have risen considerably last month. This could be a sign that the job market has consolidated enough to induce employers to pay more to get and retain employees.

The unemployment rate in the United States is now down to less than 5 percent. But there is an increase of half a percentage point in the average hourly wages in January. It was the highlight of a generally positive report of the Labor Department on Feb. 5.

Although job creation slowed down from the hurried pace in late 2015, the unemployment rate dropped to its eight-year low and settled down at 4.9 percent.

"That gain in average hourly earnings is significant," said Diane Swonk, an independent economist in Chicago.

She noted that sustained increases are still needed to make up for years of stagnation.  "But it's a move in the right direction, and that's reassuring," she added.

There is a 151,000 advance in payrolls but it is less than what was projected. Based on the figures supplied by the Labor Department, the figure still reflected payback for the seasonal hiring surge in the last two months of 2015. Hourly wages jumped more than projections after rising all the way to December which is the highest, since July 2009.

The attenuated hiring have positioned the job market on more solid ground and indicated that companies are more confident about the prospects of domestic sales. If labor conditions are made even tighter, it would assure framers of the Federal Policy that inflation will achieve its mark.

"This is a very encouraging report - the fact that wages rose is very important, the unemployment rate continues to go lower, and job growth at 151,000 is still a good number," said Kathy Bostjancic, an Oxford Economics USA based in New York. This group is one of the best forecasters of the payrolls data in the last two years, based on Bloomberg compiled data.

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