Hiring surges in January; jobless rate at 8.3 pct.

Daniela Sil­vero, left, an admis­sions offi­cer at ASA Col­lege, dis­cusses job oppor­tu­ni­ties with Patrick Rosarie, who is seek­ing a job in IT, dur­ing JobEXPO’s job fair, in New York. The unem­ploy­ment rate fell for the fifth straight month after a surge of Jan­u­ary hir­ing, a promis­ing shift in the nation’s out­look for job growth. (AP Photo/Bebeto Matthews)

CHRISTOPHER S. RUGABER

AP Eco­nom­ics Writer

WASHINGTON — In a long-awaited surge of hir­ing, com­pa­nies added 243,000 jobs in Jan­u­ary — across the econ­omy, up and down the pay scale and far more than just about any­one expected. Unem­ploy­ment fell to 8.3 per­cent, the low­est in three years.

The job growth was the fastest since last March and April. Before that, the last month with stronger hir­ing, exclud­ing months skewed by tem­po­rary cen­sus jobs, was March 2006.

The unem­ploy­ment rate came down by two notches from Decem­ber. It has fallen five months in a row, the first time that has hap­pened since 1994, two eco­nomic booms and two reces­sions ago.

“The econ­omy is grow­ing stronger,” Pres­i­dent Barack Obama said. “The recov­ery is speed­ing up.”

Indeed, the report Fri­day from the Labor Depart­ment seemed to rein­force that the nation is enter­ing a vir­tu­ous cycle, a rein­forc­ing loop in which stronger hir­ing leads to more con­sumer spend­ing, which leads to even more hir­ing and spending.

On Wall Street, where investors had already dri­ven stocks to their best start in 15 years because of opti­mism about the econ­omy, the jobs report trig­gered a spasm of buying.

The Dow Jones indus­trial aver­age climbed 156.82 points, its second-best show­ing this year, and fin­ished the day at 12,862.23, its high­est close since May 2008, four months before the finan­cial cri­sis struck.

The Nas­daq com­pos­ite index fin­ished at its high­est level since Decem­ber 2000, dur­ing a steep decline after the dot-com stock craze. Money poured out of bonds, which are con­sid­ered less risky than stocks, and bond yields rose.

“Vir­tu­ally every econ­o­mist on the planet had expected a drop in the rate of job gains in Jan­u­ary, which makes today’s upward sur­prise even more sur­pris­ing,” Dan Green­haus, chief global strate­gist at the bro­ker­age BTIG, said in a note to clients. In Decem­ber, 203,000 jobs were created.

The impres­sive jobs report rever­ber­ated through the pres­i­den­tial cam­paign and could improve Obama’s re-election prospects. The drop in the unem­ploy­ment rate put it exactly where it was in Feb­ru­ary 2009, the month after Obama took office.

In Arling­ton, Va., the pres­i­dent argued that now was no time to let a 2-percentage-point cut in the Social Secu­rity pay­roll tax expire, as it will if Con­gress doesn’t take action by the end of the month. The tax cut reaches 160 mil­lion Americans.

Of the eco­nomic recov­ery, he said: “We’ve got to do every­thing in our power to keep it going. We can’t go back to the poli­cies that led to the reces­sion, and we can’t let Wash­ing­ton stand in the way of the recovery.”

His Repub­li­can foes used the num­bers to argue that the pace of improve­ment was not good enough.

“We can do bet­ter,” said for­mer Mass­a­chu­setts Gov. Mitt Rom­ney, the Repub­li­can front-runner. “These num­bers can­not hide the fact that Pres­i­dent Obama’s poli­cies have pre­vented a true eco­nomic recovery.”

Unem­ploy­ment was 6.8 per­cent when Obama was elected, 7.8 per­cent when he was sworn in and 10 per­cent, its recent peak, nine months later. No pres­i­dent since World War II has won re-election with unem­ploy­ment higher than 7.2 percent.

The job gains in Jan­u­ary were widespread:

— The pro­fes­sional ser­vices cat­e­gory, which includes high-paying jobs like archi­tects, accoun­tants and engi­neers, added 70,000 jobs, the most in 10 months. The cat­e­gory also includes tem­po­rary workers.

— Man­u­fac­tur­ing added 50,000 jobs, the most in a year, and the belea­guered con­struc­tion indus­try added 21,000, its sec­ond straight month of strong gains. Con­struc­tion added 31,000 jobs in Decem­ber. Both months were prob­a­bly helped by the warm winter.

— The leisure and hos­pi­tal­ity indus­try, which includes restau­rants and hotels, added 44,000 jobs. Retail­ers added nearly 11,000. Gov­ern­ments cut 14,000 jobs, which means the pri­vate sec­tor added 257,000.

The 243,000 jobs added far exceeded the esti­mate by econ­o­mists of 155,000, accord­ing to Fact­Set, a provider of finan­cial data. Some sur­veys of econ­o­mists came in even lower.

Gov­ern­ment revi­sions to pre­vi­ous months’ totals were another encour­ag­ing sign. Hir­ing was stronger in Novem­ber and Decem­ber by 60,000 jobs than first esti­mated. Novem­ber was revised up from 100,000 to 157,000 and Decem­ber from 200,000 to 203,000.

The gov­ern­ment also issued its annual revi­sions to jobs data going back five years. They showed that hir­ing was stronger over the past two years than pre­vi­ously thought. The econ­omy added about 1.82 mil­lion jobs last year, com­pared with an orig­i­nal esti­mate of 1.64 million.

“This is a very pos­i­tive employ­ment report from almost any angle,” said Brian Bethune, an eco­nom­ics pro­fes­sor at Amherst College.

The gov­ern­ment uses a sur­vey of mostly large com­pa­nies and gov­ern­ment agen­cies to deter­mine how many jobs were added or lost each month. That sur­vey pro­duced the 243,000 number.

It uses a sep­a­rate sur­vey of house­holds to deter­mine the unem­ploy­ment rate. The house­hold sur­vey had more good news: 631,000 peo­ple said they found work in Jan­u­ary. That pushed the unem­ploy­ment rate down to 8.3 per­cent and the num­ber of unem­ployed down to 12.8 mil­lion, the fewest in three years.

And 250,000 peo­ple streamed back into the work force and started look­ing for jobs. That increased slightly the size of the work force, which the gov­ern­ment defines as peo­ple work­ing and peo­ple unem­ployed but seek­ing work.

At the same time, the pro­por­tion of the pop­u­la­tion work­ing or look­ing for work is its low­est in almost three decades. The length and depth of the reces­sion have dis­cour­aged mil­lions of peo­ple from look­ing for jobs. The bet­ter news of the past cou­ple months has not yet encour­aged most of them to start search­ing again.

Econ­o­mists said the report prob­a­bly makes it less likely that the Fed­eral Reserve will take addi­tional steps to help the econ­omy soon, such as the mas­sive bond-buying pro­grams it launched in 2008 and 2010. That was another rea­son bond prices fell after the report was released.

The Fed has already held its bench­mark short-term inter­est rate near zero for three years and bought almost $2 tril­lion in gov­ern­ment bonds and other secu­ri­ties to keep long-term rates low.

Fed Chair­man Ben Bernanke said last week that the cen­tral bank planned to keep its short-term rate near zero at least until late 2014. But if the unem­ploy­ment rate keeps com­ing down, that date could be moved up, sev­eral econ­o­mists said.

Even with January’s gains, the job mar­ket is a long way from full health. The nation has about 5.6 mil­lion fewer jobs than it did when the Great Reces­sion began in Decem­ber 2007.

Employ­ers have added an aver­age of 201,000 jobs a month the past three months. That’s 50,000 more than the econ­omy aver­aged each month last year.

Still, 11 mil­lion peo­ple either have stopped look­ing for jobs or are work­ing part time and would rather work full time. When those peo­ple are added to the 12.8 mil­lion unem­ployed, nearly 24 mil­lion are con­sid­ered under­em­ployed. The so-called under­em­ploy­ment rate edged down in Jan­u­ary to 15.1 per­cent, from 15.2 percent.

Although the road back from the Great Reces­sion cer­tainly seems long, it would not be unusual for hir­ing to accel­er­ate, as it appears to be doing, 31 months after the reces­sion ended in June 2009.

After the pre­vi­ous reces­sion, which lasted from March through Novem­ber 2001, it took until March 2004 — 28 months after the econ­omy started grow­ing again — for hir­ing to pick up con­sid­er­ably. The reces­sion before that was from July 1990 through March 1991, and it took 22 months, until Jan­u­ary 1994.

The Great Reces­sion was longer and deeper than the pre­vi­ous two reces­sions, or any other since the Depres­sion, so a longer lag hasn’t been sur­pris­ing to some economists.

The jobs report put an excla­ma­tion mark on a week of encour­ag­ing eco­nomic news.

— Man­u­fac­tur­ing grew in Jan­u­ary at the fastest pace in seven months. Fac­tory orders rose in Decem­ber by 1.1 per­cent, dri­ven higher by big increases in spend­ing on indus­trial machin­ery and autos.

— The four-week aver­age of peo­ple fil­ing for unem­ploy­ment ben­e­fits fell to its second-lowest since June 2008. The drop shows that com­pa­nies are cut­ting fewer jobs, which usu­ally leads to more hiring.

— Automak­ers began 2012 with a strong sales gain in Jan­u­ary. Health­ier auto sales can boost a range of com­pa­nies, from steel mak­ers to parts sup­pli­ers to shippers.

Also Fri­day, a pri­vate trade group said U.S. ser­vice com­pa­nies, includ­ing stores, hotels and restau­rants, expanded at the fastest pace in nearly a year in Jan­u­ary. The survey’s employ­ment index soared to its high­est level in nearly six years.

The econ­omy grew faster every quar­ter last year. From Octo­ber through Decem­ber, it expanded at a 2.8 per­cent annual rate, the best since the spring of 2010 and a full per­cent­age point higher than in the pre­vi­ous quarter.

Growth could slow later this year. Much of the fourth quarter’s expan­sion was due to com­pa­nies order­ing more goods to restock their ware­houses. Restock­ing is likely to slow in the first three months of this year, and that would bring down growth.

Europe’s finan­cial cri­sis could also slow demand for U.S. goods. And aver­age wages failed to keep up with infla­tion last year. That leaves Amer­i­cans with less spend­ing power, which can ham­per growth.

But many ana­lysts are opti­mistic. Jen­nifer Lee, an econ­o­mist at BMO Cap­i­tal Mar­kets, said she expects the econ­omy to expand at a 2.5 per­cent annual clip in the first quar­ter, up from an ear­lier esti­mate of 2 percent.

There is opti­mism among busi­ness lead­ers, too. Lan­ham Napier, CEO of Rack­space Host­ing, a San Anto­nio com­pany that hosts and main­tains cor­po­rate web­sites, said his com­pany hired about 650 peo­ple last year and plans to add roughly as many this year.

Napier said his company’s clients are spend­ing about 10 per­cent more than a year ago because their busi­nesses are pick­ing up. When online retail­ers receive a crush of sales, for exam­ple, they pay Rack­space for more com­puter capacity.

“We’re mak­ing more money than we’ve ever made,” Napier said. “We’re opti­mistic about 2012.”

Posted by AP News on Feb 3 2012. You can follow any responses to this entry through the RSS Feed. Comments can be made below.