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January’s job report was good, but not as great as the headline appears. Although employers added 227,000 jobs in January, the unemployment rate ticked up to 4.8%. The consensus forecast had anticipated 175,000 new jobs and unemployment remaining at 4.7%. Revisions to November and December figures bring their net to 39,000 fewer jobs than were evident in the December report. The three-month rolling average increased by nearly 20,000 to 183,000 new jobs per month—slightly above 2016’s monthly average of 180,000.

The disappointing news came from wage growth, which has slowed since the big jump in December. Hourly wages rose by three cents in January for a year-over-year gain of 2.5%—down from December’s 2.9%. The outlook for wage growth remains positive, despite January’s slip.

The labor force participation rate increased by 0.2 percentage points in January, to 62.9%. The monthly number is volatile, but the series has remained between 62.4% and 63.0% since August 2013. The employment-to-population ratio also rose by 0.2 percentage points to 59.9%, after three months of no change.

Retail trade added 46,000 jobs last month, and 229,000 over the past year, showing that although certain retailers continue to struggle, mall and retail centers continue to attract tenants and the workers needed to run their stores.

Construction employment rose by 36,000 jobs in January. The weather in many parts of the country was relatively mild and that may have allowed projects to get underway sooner, boosting the sector’s job growth. Some specialty construction jobs face a labor shortage, so it is encouraging that jobs are growing at a solid pace. Commercial real estate is playing a big role in this demand, as most property types are in the expansionary phase of the construction cycle. Financial activities added 32,000 jobs in January and professional & technical services added 23,000 jobs. This should help the office market, as most of these jobs are office-based.

This release from the Bureau of Labor Statistics marked the annual benchmark revision to the data. The changes were minor, with the total non-farm payroll revised downward by 60,000 jobs. This is equal to 0.1%. For the past 10 years, the absolute average change is 0.3%.

This report was good enough to support an optimistic economic outlook, while also dispelling concern about the economy overheating. We maintain our expectation that the Fed will raise interest rates three times in 2017, as wage growth and inflationary pressures increase.