The U.S. economy added 157,000 jobs last month, as the unemployment rate rose slightly to 7.9 percent, the Labor Department revealed in the January jobs report, released Friday.
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More from the Associated Press:
WASHINGTON — U.S. employers added 157,000 jobs in January and hiring was stronger over the past two years than previously thought, providing reassurance that the job market held steady while economic growth sputtered.The mostly upbeat Labor Department report Friday included one negative sign: the unemployment rate rose to 7.9 percent from 7.8 percent in December. The unemployment rate is calculated from a survey of households, while job gains come from a survey of employers.
The hiring picture over the past two years looked better after the department's annual revisions. Those showed employers added an average of roughly 180,000 jobs per month in 2012 and 2011, up from previous estimates of about 150,000. And hiring was stronger at the end of last year, averaging 200,000 new jobs in the final three months.
Stock futures rose after the report was released.
One notable change in the job market is the stronger contribution from construction firms. They added 28,000 jobs in January and nearly 100,000 in the past four months. The gains are consistent with a rebound in home construction and a broader recovery in housing.
Last month's hiring should cushion the impact of the higher Social Security taxes that most consumers are paying this year. And it would help the economy resume growing after it shrank at an annual rate of 0.1 percent in the October-December quarter.
Higher Social Security taxes are reducing take-home pay for most Americans. A person earning $50,000 a year will have about $1,000 less to spend in 2013. A household with two high-paid workers will have up to $4,500 less. Taxes rose after a 2 percent cut, in place for two years, expired Jan. 1.
Analysts expect the Social Security tax increase to shave about a half-point off economic growth in 2013, since consumers drive about 70 percent of economic activity.
The hit to consumers is coming at a precarious moment for the economy. It contracted in the fourth quarter for the first time in 3 1/2 years. The decline was driven largely by a steep cut in defense spending and a drop in exports. Analysts generally think those factors will prove temporary and that the economy will resume growing.
Still, the contraction last quarter points to what are likely to be key challenges for the economy this year: the prospect of sharp government spending cuts and uncertainty over whether Congress will agree to raise the federal borrowing cap.
Most analysts predict that the economy will grow again in the January-March quarter, though likely at a lackluster annual rate of around 1 percent. They expect the economy to expand about 2 percent for the full year.
Two key drivers of growth improved last quarter: Consumer spending increased at a faster pace. And businesses invested more in equipment and software.
In addition, homebuilders are stepping up construction to meet rising demand. That could generate even more construction jobs.
And home prices are rising steadily. That tends to make Americans feel wealthier and more likely to spend. Housing could add as much as 1 percentage point to economic growth this year, some economists estimate.
Auto sales reached their highest level in five years in 2012 and are expected to keep growing this year. That's boosting production and hiring at U.S. automakers and their suppliers.
Also on HuffPost:
| @ Goldfarb : Finishing 4 yrs college makes huge difference: Unemp. among grads is 3.7%. People who attended <4 yrs, it’s 7 percent. |
| @ Reddy : Government jobs (federal/state/local) fell 77,000 in 2012. Losses of 317k in 2011, 213k in 2010, 76k in 2009. Five years of gains pre-2009. |
From Wall Street Journal economics reporter Sudeep Reddy:
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| @ Reddy : After revisions, average monthly job change in 2012: +181,000. 2011: +175k. 2010: +85k. 2009: -421k. 2008: -301k. 2007: +93k. |
--Bonnie Kavoussi
The housing market, which some say has held back the economic recovery, seems to be gaining force. From Jed Kolko, chief economist at Trulia:
| @ JedKolko : Hello, housing. Total jobs +1.5% yoy; construction jobs +1.8% yoy; RESIDENTIAL construction jobs +2.6% yoy. |
--Bonnie Kavoussi
| @ petersgoodman : Status quo jobs report, says conventional wisdom, as if status quo of nearly 8pc unemployment is fine. #warpedassumptions |
In a new research note, ING economist Rob Carnell notes that sequestration, or deep budget cuts scheduled for March 1, really could hurt jobs growth:
The government only reduced this by 9K, continuing the trend of only modest job losses in this sector, compared to the great public labour shedding that took place during the crisis. That said, sequestration could re-start that trend from March – so complacency is not advisable.
--Bonnie Kavoussi
Sometimes the unemployment rate rises because people that gave up on looking for work start searching for a job again. But that wasn't the reason why the unemployment rate rose in January, according to Reuters Breakingviews columnist Daniel Indiviglio:
| @ indiviglio : The unemployment rate rose, not because of labor participation, but because household survey unemployed rose by 117,000. |
--Bonnie Kavoussi
The unemployment rate for people without a high school diploma spiked to 12 percent in January, notes Sudeep Reddy, an economics reporter at The Wall Street Journal. It is triple the unemployment rate for college graduates:
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| @ Reddy : Jobless rate dropped for people with a bachelor's degree (to 3.7% from 3.9%). Rose for those with no high school diploma, to 12% from 11.7%. |
--Bonnie Kavoussi
President Barack Obama has touted manufacturing as a key part of his jobs plan. But manufacturing jobs growth still is weak, notes Timothy Aeppel, an economics editor at The Wall Street Journal:
| @ TimAeppel : Manufacturing adds only 4,000 jobs. |
--Bonnie Kavoussi
More from The New York Times' Binyamin Appelbaum:
| @ BCAppelbaum : Since the Fed announced its massive new program to reduce unemployment in September, the unemployment rate has... increased. |
From Binyamin Appelbaum, an economic policy reporter at The New York Times:
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| @ BCAppelbaum : The unemployment rate has not declined since September. |
--Bonnie Kavoussi
At least inflation-adjusted wages aren't falling? From Adam Hersh, an economist at the Center for American Progress:
| @ adamshersh : Wages are now basically keeping pace with inflation. |
--Bonnie Kavoussi
David Wessel, economics editor at the Wall Street Journal, notes that the government still is laying off workers:
| @ davidmwessel : Private sector added 166k jobs in January. Govt subtracted 9k. |
--Bonnie Kavoussi
From Washington Post reporter Zachary Goldfarb:
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| @ Goldfarb : In 2012, employment growth averaged 181,000/month. |
--Bonnie Kavoussi
| @ justinwolfers : After revisions, payrolls growth averaging +203k over the past three months, which seems pretty darn healthy. This recovery is humming along |
From Justin Wolfers, an economics professor at the University of Michigan:
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| @ justinwolfers : Wow, big revisions upward: November up from +161k to +247k, and December up from +155k to +196k. |
--Bonnie Kavoussi
Here are three charts of the job market slowly improving from Quartz, via Quartz's Matthew Phillips.
--Bonnie Kavoussi
Economists on average predict that 165,000 jobs were created in January, according to Kevin Depew, editor of Bloomberg's Economics Brief. But he notes that since 153,000 jobs have been created on average every month for the past year, it would take a number below that to be truly disappointing.
| @ kevindepew : For #NFP 12-month average pace is 153k. While median survey est. is 165k, it would really take something below 153k to be "bad." |
The Wall Street Journal says that economists estimate that 166,000 jobs were added in January.
--Bonnie Kavoussi
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Posted: 02/01/2013 8:32 am EST | Updated: 02/01/2013 5:27 pm EST