Employment Jumps; Rate 8.3%, 243,000 New Jobs Created
The pace of job creation surged in January, with the US economy generating 243,000 new positions while the unemployment rate dropped to 8.3 percent, according to government data released Friday.
Both numbers were far better than consensus, which expected a growth of 150,000 jobs and a steady unemployment rate of 8.5 percent.
The stock marketrallied on the jobs news, with gains of better than 1 percent, while bond yieldssurged as well to push the benchmark 10-year Treasury to 1.93 percent.
"What’s not to like about the report?" said Andrew Wilkinson, chief economic strategist at Miller Tabak in New York. "Not only did payrolls exceed forecasts...but between the November and December revisions employers added 160,000 more jobs than first thought."
The overall work week remained unchanged at 34.5 hours while wages rose an average of four cents an hour to $23.29.
On the downside, the closely watched labor-force participation number, which can skew the unemployment rate, fell to 63.7 percent, the lowest since May 1983. The number of those working part-time for economic reasons rose 1.2 percent.
The January numbers can be volatile as the Bureau of Labor Statistics makes seasonal adjustments. This year's round produced 1.25 million fewer people in the workforce in December, a number that drew some focus as evidence that the drop in the jobless rate could be misleading.
"Looking beyond these statistical quirks, watching the unemployment rate drop five months in a row is rare event, and our expectation is that the unemployment rate rises in the immediate-term," said Neil Dutta, economist at Bank of America Merrill Lynch.
Job gains have been concentrated primarily in the service sector, particularly in retail and the food and beverage industries. Warehousing, manufacturing, mining and health care also have participated.
True to form, services were responsible for 162,000 of the January swell, with manufacturing payrolls growing 50,000. Government cuts subtracted 14,000 from the total. Retail has added 390,000 jobs since December 2009, while durable goods manufacturing is up 418,000 over the past two years, according to government figures.
"The pattern is definitely indicating the economy is improving," Alan Kreuger, chairman of President Obama's Council of Economic Advisors, told CNBC.
With a bruising presidential campaign yet to come and both sides jockeying for position on the economy, Republicans scoffed at the gains and said the economy still needs repair.
"Our economy remains unacceptably weak, and families across the country are still struggling to make ends meet,” Republican National Committee Chairman Reince Priebus said in a statement.
The total number of unemployed fell below 13 million for the first time since February 2009, while the total amount of employed Americans rose to 141.6 million, an increase of 847,000 from December.
The unemployment rate was last this low in February 2009 as well.
"The real kicker is not the additional 200-plus thousand that got a job. That's certainly going to help, but it's the other 92 percent that have been employed," said James Paulsen, chief market strategist at Wells Capital Management in Minneapolis. "They'll step up a little bit more because they feel more comfortable about things. That's a little juice to the economy."
Several economists noted that a jump in courier workers during the holiday season that was expected to be temporary did not appear to impact the January numbers.
Unemployment for blacks plunged from 15.8 percent to 13.6 percent, while the rate for Hispanics fell from 11.0 percent to 10.5 percent. The teen unemployment rate rose one-tenth to 23.2 percent.
The so-called real unemployment rate, which measures discouraged workers as well and is referred to as the U-6, nudged lower to 15.1 percent.
Long-term unemployment, though, remains a problem, with the duration dropping from a near-record 40.8 weeks to 40.1 weeks.
Also, the level of discouraged workers surged, rising 7 percent to its highest level since December 2010.
Job growth remains one of the two missing pieces of the recovery puzzle, even though the rate has been on a steady trek lower.
In December, the economy created 203,000 jobs (revised from an originally reported 200,000) and the unemployment rate slipped to 8.5 percent, well off its 10 percent cycle peak in October 2009.
November's payroll number also was revised, from 100,000 to 157,000. Revisions overall for 2011 added about 180,000 jobs to the initial monthly reports.
The monthly jobs report generally draws considerable trader reaction, which as of late has been all negative. The Standard & Poor's 500 has fallen the last eight months on the first Friday of the month when the nonfarm payrolls account is released. This has been true even when the market beats expectations, with the index averaging a decline on the 10 strongest performances against expectations since 1998, according to Bespoke Investment Group.