WASHINGTON: U.S. employers added 157,000 jobs in January, and hiring was much stronger at the end of 2012 than previously thought, providing reassurance that the job market held steady even as economic growth stalled.
The Labor Department report Friday showed a jump in hiring in the final two months of last year, just when the economy was sputtering and facing the threat of deep spending cuts and tax increases from federal government budget negotiations. The department revised up the estimated job gains for November from 161,000 to 247,000 and for December from 155,000 to 196,000.
The mostly encouraging jobs report included one negative sign: The unemployment rate rose to 7.9 percent from 7.8 percent in December. The rate is calculated from a survey of households, and more people in that survey said they were unemployed.
The monthly job gains are derived from a separate survey of employers.
The hiring picture over the past two years also looked stronger after the department’s annual revisions. The revisions showed that employers added an average of roughly 180,000 jobs a month in 2012 and 2011. That was up from previous estimates of about 150,000.
“The significantly stronger payroll gains tell us the economy has a lot more momentum than what we had thought,” Joseph LaVorgna, chief U.S. economist at Deutsche Bank, said in a research note.
The report revealed a notable shift in the job market: More hiring by construction companies. They added 28,000 jobs in January and nearly 100,000 over the past four months. Those job gains are consistent with a rebound in home construction and a broader recovery in housing.
Retailers added 33,000 positions. Health care gained 23,000 jobs. Manufacturers reported a small increase of 4,000. Restaurants and hotels added 17,000.
Average hourly wages rose 4 cents to $23.78 and have risen an encouraging 2.1 percent in the past 12 months. That’s slightly above the inflation rate, which was 1.7 percent.
The jobs report, and especially major revisions for November and December, vigorously scrambled Americans’ understanding not only of recent job creation’s strength but of its structure as well, wrote Alan Tonelson, research fellow with the U.S. Business and Industry Council.
“In addition to showing stronger late-2012 hiring than originally estimated, the January jobs figures showed that the economy’s subsidized private sector (industries like health care services that receive big government subsidies) played a considerably weaker role in job creation than previously gauged,” Tonelson said in a note. “Hence, the ‘real’ private sector, where growth and hiring are overwhelmingly shaped by market forces, performed better as a job creator.”
The revisions also affected manufacturing, with the new numbers small in absolute terms but big in percentage terms, Tonelson said. “Overall, they confirmed a significant slowing in manufacturing job gains since the middle of last year.”
Manufacturing’s 8.86 percent share of total U.S. jobs is back to its levels when industrial employment bottomed in January 2010, and well below its 9.96 percent share when the recession began, he said.
Tonelson said the “real private sector’s” share of total employment is still lower than at the start of the last recession.
Economist Ken Mayland in Pepper Pike said Friday’s job figures are consistent with modest to moderate growth in the private sector.
“Companies are operating lean, and thus, they need workers to achieve even modest growth,” Mayland wrote in a note. “The private economy has been repressed for a long time — years of below-average growth. The private economy wants to expand. Hence, job creation could accelerate as this year evolves.”
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.
The hit to consumers is coming at a precarious moment for the economy. It contracted in the fourth quarter for the first time in 3½ 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 in government spending cuts and uncertainty over federal borrowing.
