Unemployment rate hits 8.3 pct. after hiring burst
WASHINGTON — In the most impressive surge for the job market since the middle of last decade, the United States added 243,000 jobs in January, far more than economists expected. The unemployment rate dropped to 8.3 percent, the lowest in three years.
Hiring accelerated across the economy and up and down the pay scale. The high-salary professional services industry added 70,000 jobs, the most in 10 months. Manufacturing added 50,000, the most in a year.
The report Friday from the Labor Department sent money pouring into the stock market and out of more conservative investments in bonds. Dow Jones industrial average futures, virtually flat before the report was released at 8:30 a.m. EST, jumped 100 points.
The stock market is already off to its fastest start in 15 years as more investors start to believe the economic recovery is finally for real and will only get stronger. The Dow has gained 4 percent in 2012.
It was the most jobs added since and April and May 2010, when 277,000 and 458,000 jobs were created. But those months were skewed by massive hiring for the census. Before that, the last month with more job creation was March 2006.
The unemployment rate was down two ticks from last month and the lowest since an 8.3 percent reading in February 2009. It was also the fifth consecutive month that the rate has fallen, the first time that has happened since late 1994.
The report seemed certain to shake up the presidential campaign, which is expected to turn on the economy. Unemployment was 7.8 percent when President Barack Obama took office in and 10 percent, its peak for the economic downturn, nine months later.
Employers have added an average of 201,000 jobs a month in the past three months. That’s 50,000 more jobs per month than the economy averaged in each month last year.
The Labor Department’s January jobs report was filled with other encouraging data and revisions. The economy added 200,000 more jobs in 2011 than first thought.
The unemployment rate is nearly a percentage point lower than over the summer, when many feared a recession was imminent.
Impressively, the job gains last month were spread across the economy. Even the beleaguered construction sector added 21,000 jobs, its second month of strong gains. That figure has probably been helped by unseasonably warm weather this winter.
The leisure and hospitality industry, which includes restaurants and hotels, added 44,000 jobs. Retailers added nearly 11,000.
The unemployment rate fell even as more people began looking for work. But a much larger number said they found work.
More jobs and higher incomes should help consumers boost spending and increase economic growth.
Job gains in November and December were revised upward to show that an additional 60,000 jobs were created in those two months.
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, nearly twice as many as in 2010.
Even with the gains, the job market faces a long way back to full health. The nation has about 5.6 million fewer jobs than it did when the recession began in late 2007.
There are still 12.8 million people out of work, though that is the fewest since the recession ended. An additional 11 million are either working part-time but would prefer full-time work, or have stopped searching for jobs.
When all those groups are combined, nearly 24 million are considered “underemployed. The so-called “underemployment” rate ticked down in January to 15.1 percent, from 15.2 percent.
Several reports signaled this week that the economy is improving gradually. Manufacturers expanded at the fastest pace in seven months in January, a private survey showed.
And fewer people sought unemployment benefits last week, the Labor Department said. The four-week average of applications fell to its second-lowest level since June 2008. The drop shows that companies are cutting fewer jobs, which usually leads to more hiring.
Americans spent more at big chain retail stores last month compared with a year earlier. And 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.
The economy expanded at a 2.8 percent annual pace in the October-December quarter, a full percentage point higher than in the previous quarter.
Even so, economists expect slower growth 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. That would drag on 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 consumers with less spending power, which can hamper growth.