The US labor market kicked off 2017 on a firm footing adding 227k jobs during the first month of the year. The data, released by the Labor Department was upbeat as it raised the prospects of another solid pace of job gains amid a burst of optimism among businesses under the new Trump administration.

The job gains came from the retail, construction, and financial services, while federal jobs both state and local government jobs fell by 10k. The jobs for November and December were revised down by a combined 39k.

U.S. Nonfarm payrolls: 227k, January 2017 (Source: Tradingeconomics, BLS)

Headline payrolls increase, wage growth slows

U.S. Average hourly earnings 0.1%, January 2017 (Source: Tradingeconomics, BLS)

The US unemployment rate jumped to 4.8% from 4.7% in January while average hourly earnings rose by $0.03 to $26 bring the annual pace of wage growth to 2.5%, down from December’s 2.9% record increase. Economists were expecting the headline print to show 175k jobs while expecting wages to maintain December’s yearly gain of 2.9% after more than 20 states raised minimum wage last month. Wage growth for the previous month was revised down from 0.4% to 0.2%.

Speaking after the release, Mohamed El-Erian from Allianz SE said that the lackluster growth in wages could keep the Fed from hiking rates in March. “The figure on pay is disappointing,” El-Erian told Bloomberg adding that it jobs report reduced the chances of a March rate hike. “It puts even more focus on structural measures to enhance wage growth,” he said.

The US labor market continues to grow steadily, with the unemployment rate lingering close to the Fed’s full employment mandate. However, economists are expecting job growth pace to stabilize around 160k down from 187k average page of jobs that were added in 2016.

The labor force participation rate, which shows the share of workers with jobs or looking for jobs rose to 62.9% in January, up from 62.7% previously. Despite the uptick in the labor force participation rate, it remains near the lowest levels.