Reuters logo
WRAPUP 6-U.S. jobs, factory data point to steady economic growth
February 1, 2013 / 1:30 PM / 5 years ago

WRAPUP 6-U.S. jobs, factory data point to steady economic growth

* U.S. nonfarm payrolls rise 157,000 in January
    * Unemployment rate ticks up to 7.9 percent from 7.8 percent
    * Average hourly earnings rise four cents
    * Factory activity picks up in January, consumer morale up
    * Reports show sluggish economic recovery on track

    By Lucia Mutikani
    WASHINGTON, Feb 1 (Reuters) - U.S. employment grew modestly
in January and job gains in the previous two months were larger
than first reported, a counterpunch to recent data that
suggested a tepid economic recovery had stalled at the end of
last year.
    Adding to that optimism, separate reports on Friday showed
factory activity hit a nine-month high in January as new orders
rebounded, while car and truck sales surged and consumer
confidence perked.
    The reports, which helped propel U.S. stock markets to their
highest levels in more than five years, contrasted markedly with
a government report earlier in the week that said the economy
shrank unexpectedly in the final months of 2012, albeit for what
most economists consider fleeting reasons.
    "It is clear that the economy has a forward momentum. Most
pistons in the economic engine are firing, pointing to sustained
economic growth," said Sung Won Sohn, an economics professor at
California State University Channel Islands.
    Employers added 157,000 jobs last month and 127,000 more
jobs were created in November and December than previously
reported, the Labor Department said. Revisions performed each
January to the prior year's data showed the labor market was
healthier in 2012 than initially thought.
    While the unemployment rate rose 0.1 percentage point to 7.9
percent, the closely watched report showed an increase in hourly
earnings and solid gains in construction and retail employment.
    Separately, the Institute for Supply Management said its
index of national factory activity rose to 53.1 last month, the
highest level since April, from 50.2 in December. A reading over
50 suggests expansion in the manufacturing sector. 
    Activity was boosted by a bounce back in orders and
inventories, as well as gains in employment. That offered hope
manufacturing will continue to support the economy.
    The fairly upbeat reports sparked a rally on Wall Street,
with the Dow Jones industrial average touching its highest level
since mid-October 2007 and the Standard & Poor's index rising to
a five-year high.
    The dollar rallied against the Japanese yen, while U.S.
Treasury debt prices fell marginally. 

    A third report on Friday showed consumer sentiment on the
rise even as households faced up to smaller paychecks as some 
federal taxes rose on Jan. 1.
    The economic growth picture was also brightened by reports
showing several automakers, including General Motors Co 
and Ford Motor Co scored better-than-expected sales in
    The flurry of upbeat reports followed Wednesday's surprise
contraction in gross domestic product in the fourth quarter, 
and as a group should ease worries that the United States was 
at risk for recession. 
    GDP contracted at a 0.1 percent annual rate in the fourth
quarter, largely because of a plunge in defense spending and 
slowdown in the pace of inventory accumulation. 
    Superstorm Sandy, which hit the East Coast in late October,
also weighed on output, a drag that should lift this quarter and
could be replaced by new spending linked to rebuilding projects.
    "Underneath the surface, the fourth-quarter economy was
really pretty good despite all the defense cuts. I think the
private sector is leading the way," said Jack Ablin, chief
investment officer at BMO Private Bank in Chicago.
    Still, the pace of job growth is too slow to absorb the
roughly 22.7 million Americans who are either unemployed or
working part-time while hoping for full-time work.
    Economists say employment gains in excess of 250,000 a month
over a sustained period are needed to make a significant dent in
the jobless rate.
    The Federal Reserve on Wednesday left in place a monthly $85
billion bond-buying stimulus plan, saying economic activity had
"paused" in recent months.
    "The report keeps the Fed clearly in play to continue their
easy monetary policy," said Eric Stein, portfolio manager at
Eaton Vance Investment Managers in Boston. 
    The Labor Department's annual benchmark revisions, going
back to 2008, found the level of employment as of March 2012 was
422,000 higher than previously reported. That helped to push the
average job growth for 2012 to 181,000 a month from 153,000
    Those steady gains, if sustained, could help the economy
weather the headwinds of higher taxes and lower government
spending. A payroll tax cut expired on Jan. 1 and automatic
spending cuts will kick in in March unless Congress acts.
    January's job gains all came in the private sector. Hiring
was broad-based, as it was in December, and declines in public
sector employment were small.
    The goods-producing sector showed a third month of solid
gains, and manufacturing employment advanced for a fourth
straight month. Construction payrolls increased 28,000, adding
to December's healthy 30,000 gain.
    Since hitting a low in January 2011, construction employment
has grown by 296,000. Fully one-third of those gains have taken
place in the last four months alone.
    Though the level of construction jobs remains about 2
million below its peak in 2006, further improvement is expected
this year as the housing market recovery gains momentum.
    Housing is expected to support the economy this year, taking
over the baton from manufacturing, as many Americans buy and
start to furnish and renovate houses.
    Within the vast private services sector, retail jobs rose 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 of cuts is moderating as
local government layoffs, outside education, subside. 
    Average hourly earnings rose four cents last month and were
up 2.1 percent in the 12 months through January. That followed a
similar gain in December. 
    "It may be that we are now getting to a point in the labor
market where we are going to see an upward creep in average
hourly earnings," said John Ryding, chief economist at RDQ
Economics in New York.
    "That's going to be good for the consumer and they need help
because they are being whacked by the payrolls tax increase." 
   The length of the workweek for the average worker was steady
at 34.4 hours for a third straight month.

Our Standards:The Thomson Reuters Trust Principles.
0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below