The report, along with private reports on auto and retail chain sales and manufacturing activity, shows the U.S. economy last month had considerable momentum after growing during the final three months of 1998 at the fastest rate in 2 years. It raises questions about how much longer the Federal Reserve can resist raising short-term interest rates. At Fed policy-makers' most recent meeting, this week, they decided to hold rates unchanged. But Federal Reserve Chairman Alan Greenspan expressed concern in congressional testimony last month that labor shortages would propel faster wage increases, which in turn would drive up inflation. But, Labor Secretary Alexis Herman said she wasn't worried about a rate increase.
Productivity is in line with real wage gains.
That's exactly the kind of balance you want to see,'' she said. It was the largest monthly increase since August. Over the year, hourly earnings have increased 50 cents, or 4 percent. The gain was led by auto loans, up at 15.9 percent rate, the fastest in a year. January job gains were led by services.