WASHINGTON (Reuters) — Employment in the United States grew modestly in January and gains in the prior two months were bigger than initially reported, supporting views the economy's sluggish recovery was on track despite a surprise contraction in output in the final three months of 2012.
Employers added 157,000 jobs to their payrolls last month, the U.S. Labor Department said. There were 127,000 more jobs created in November and December than previously reported.
The unemployment rate, however, edged up 0.1 percentage point to 7.9 per cent.
The closely watched report also showed an increase in hourly earnings and solid gains in construction and retail employment.
"This is actually a really good number when you take into account the net upward revision," said Terry Sheehan, an economic analyst at Stone & McCarthy Research Associates in Princeton, N.J.
Economists polled by Reuters had expected employers to add 160,000 jobs and the unemployment rate to hold steady at 7.8 per cent last month.
The Labor Department also published benchmark revisions to payrolls data going back to 2008. It said the employment level in March 2012 was 422,000 higher on a seasonally adjusted basis than previously reported.
It also introduced new population factors for its survey of households from which the unemployment rate is calculated. This had a negligible effect on the major household survey measures.
Modest job growth
Job growth in 2012 averaged 181,000 per month, but not enough to significantly reduce unemployment and prompt the Fed to the pull back on its bond-buying program. Economists say employment gains in excess of 250,000 per month over a sustained period are needed.
Though the unemployment rate dropped from a peak of 10 per cent in October 2009, that was mostly because some unemployed Americans gave up the search for work because of weak job prospects.
The share of the working age population with a job has been below 60 per cent for almost four years.
All the job gains in January were in the private sector, where hiring was as broad-based as it was in December and declines in public sector employment remained moderate.
Steady job gains could help the economy weather the headwinds of higher taxes and government spending cuts. A payroll tax cut expired on Jan. 1 and big automatic spending cuts are set to take hold in March unless Congress acts.
The goods-producing sector showed a third month of solid gains, with manufacturing employment advancing for a fourth straight month. Construction payrolls increased 28,000, adding to December's healthy 30,000 gain.
Construction jobs are expected to rise further as the housing market recovery gains momentum. Housing is expected to support the economy this year, taking over the baton from manufacturing.
Within the vast private services sector, retail jobs increased by a solid 32,600 jobs after rising 11,200 in December. Retail employment has now risen for seven straight months.
Education and health payrolls added 25,000 jobs in January after employment grew by the most in 10 months in December.
Government payrolls dropped by 9,000 last month after falling 6,000 in December. The pace is moderating as local government layoffs, outside education, subside.
Average hourly earnings rose four cents last month. Hourly earnings have been rising steadily. They were up 2.1 per cent in the 12 months through January.
The length of the workweek for the average worker was steady at 34.4 hours for a third straight month.
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