US nonfarm payrolls increased by 225,000 jobs in January to beat consensus estimates as unseasonably mild temperatures boosted hiring in weather-sensitive sectors like construction. 

The unemployment rate edged up to 3.6% from a 50-year low of 3.5%, as more people entered the labor force in search of work and the average wage increased by 7 cents to $28.44 an hour. 

The Labor Department’s closely watched monthly employment report on Friday, however, showed the economy created 514,000 fewer jobs between April 2018 and March 2019 than originally estimated. 

Wall Street investors reacted negatively to the jobs report, sending the DJIA down 200 points midday.

READ: US payrolls end 2019 on sour note, adding 145K jobs in December vs 160K consensus

The biggest downgrade to payrolls over a 12-month period since 2009, suggests job growth could significantly slow down this year.

Nevertheless, January’s job report handily beat the consensus estimate of 160,000 new jobs.

“Today’s jobs report, coupled with the strong ISM readings and good consumer confidence figures suggests an encouraging start to 2020 and offers support to our view that the China-US trade deal has provided a platform for stronger growth,” said analysts at ING noted. “

Jobs continue to be created in decent numbers, but there is little wage inflation threat despite apparently tight labour markets. Consequently, with the Federal Reserve seemingly content with its current monetary policy stance, the prospect of any near-term interest rate moves seems limited.”

ING added, though, the coronavirus outbreak has the potential to upset the economy: 

“Markets appear sanguine, but at the very least the disruption to Chinese factory output and logistics operations will impact US-Asia supply chains. The hit to the Chinese economy will also diminish the prospect of the US-China phase one trade deal delivering a meaningful uplift in demand for US-made product. The threat that the coronavirus outbreak poses in an environment of already subdued global growth underlines the potential for medium-term US economic weakness.”

The construction industry, buoyed by lower mortgage rates, greater demand for new housing and mild weather, led the way by adding 44,000 jobs. Health-care providers and hotels and restaurants both created 36,000 new jobs. Transportation companies added 28,000 workers, mostly package deliverers 

–UPDATES with market movement and analyst comment–

Contact the author: patrick@proactiveinvestors.com

Follow him on Twitter @PatrickMGraham