GO
Loading...

Economy Adds Another 157,000 Jobs; Rate Up to 7.9%

Friday, 1 Feb 2013 | 9:47 AM ET
Susan Trigg | Photographer's Choice RF | Getty Images

The new year started off with an old story: Employment grew again in January but not at a pace able to lower the jobless rate.

Nonfarm payrolls rose 157,000 for the first month of 2013 while the unemployment rate edged higher to 7.9 percent, news unlikely to alter the Federal Reserve's monetary policy or instill confidence that the recovery is gaining steam.

Economists were looking for 160,000 net new jobs created with the unemployment rate holding steady at 7.8 percent.

The ho-hum jobs numbers for January were accompanied by substantial revisions higher for previous months, according to the report from the Bureau of Labor Statistics.

Traders reacted positively to the report, providing a healthy gain at the market open.

January Private Sector Jobs Up 166,000
CNBC's Hampton Pearson breaks down the latest data on employment. And, discussing what it indicates about the health of the U.S. economy and its impact on Friday's markets, with Mark Zandi, Moody's Analytics; Austan Goolsbee, Booth School of Business professor; Jared Bernstein, Center on Budget and Policy Priorities; Kelly King, BB&T chairman & CEO; and CNBC's Steve Liesman and Rick Santelli.

"The market certainly likes it," said Liz Ann Sonders, chief investment strategist at Charles Schwab. The revisions "may be the real bright spot of the report."

A report earlier this week indicated that third-quarter growth actually contracted 0.1 percent, but Friday's jobs numbers contradicted the gross domestic product read.

But November job creation rose from the originally reported 161,000 to 247,000, while December was pushed upward to 196,000 from 155,000.

"The gains we've received on the January jobs report are the start of positive readings for the foreseeable future," said Todd Schoenberger, managing partner at LandColt Capital. "The first quarter has historically delivered surprises to the upside anyway, so expect January revisions and February-March readings to be significantly positive."

Retail led the way in January with 33,000 new jobs, while construction rose 28,000 and health care added 23,000.

Transportation and warehousing shed 14,000 positions while hospitality positions such as bartenders and waiters, which led the way through much of 2012, was little changed.

The numbers come as Congress debates deficit-reduction measures and the looming possibility of deep spending cuts known as sequestration.

"Job growth in January was good, but growth overall remains too slow to provide work for all who want and need it," said Christine L. Owens, executive director of the National Employment Law Project.

"Unfortunately, Congress appears once again poised to make matters worse, with automatic budget cuts that will inflict harm on the economy—and America's working families," she added.

Indeed, there were some signs that persistent issues with the American jobs picture were clearing up, despite the fears of what Washington might do.

For the first time in nearly two years, the average duration of unemployment made a significant move lower.

That number fell to 35.3 weeks, its lowest since January 2011.

However, a separate unemployment measure that also takes into account those who have quit looking for jobs as well as those working part-time for economic reasons remained unchanged at 14.4 percent.

Though the report showed total net job gains, the actual number of Americans in the workforce was little changed, rising just 17,000. The labor force participation rate, considered a key metric in determining optimism among job seekers, was unchanged near 30-year lows at 63.6 percent.

Another key data point, the average work week, also was unchanged at 34.4 hours, while wages rose 4 cents an hour to $23,78, representing a 2.1 percent gain over the past year.

"When you look at January in and of itself you do not see the strength you would like to see at this point," said Steve Blitz, chief economist at ITG. "However, chances are January gets revised upward, you have to wait another month unfortunately. It's kind of an in-between month in that regard."

Though some recent economic reports, particularly in housing, show an economy on the mend, gains in jobs have been hard to come by.

Average job creation for 2012 was around 181,000, following BLS revisions, a number considered a shade above the benchmark for the unemployment rate to stabilize but not fall.

Most significantly, Federal Reserve monetary policy is now tied directly to the jobless rate. The U.S. central bank has said it will not alter its zero interest rate policy until the jobless rate falls to 6.5 percent and inflation eclipses 2.5 percent.

"There's going to be a lot of chatter about how and when the Fed pulls back on quantitative easing," Sonders said.

—By CNBC's Jeff Cox. Follow him on Twitter at @JeffCoxCNBCcom.

Featured

Contact Economy

  • CNBC NEWSLETTERS

    Get the best of CNBC in your inbox

    › Learn More