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WASHINGTON (MarketWatch) — The U.S. created a modest 157,000 jobs in January and the unemployment rate ticked up, but the economy added one-third of a million more positions in 2012 than previously thought, with a large chunk coming in the final months of the year.
The latest employment figures show hiring was stronger in both 2012 and 2011 than initially believed, based on tax returns not initially available to the government. And job growth was sharply higher in the fourth quarter, according to Labor Department data released Friday.The jobs figures provide further evidence that the negative reading on fourth-quarter growth — the first decline in more than three years — was exaggerated, especially given the strength in hiring at year end. Yet the slackened pace of job growth in January took off a bit of the shine. The number of jobs added to the economy last month fell short of the 170,000 forecast of analysts polled by MarketWatch. And the unemployment rate crept up to 7.9% from 7.8%.
“The best part are the revisions,” said Stuart Hoffman, chief economist at PNC Financial Services. “It’s also a good — but by no means great — start — to the new year for the jobs market.” In Friday trades, stocks headed higher from the opening bell on Wall Street, helped by upbeat manufacturing surveys from Europe and Asia, with the Dow Jones Industrial Average(US:DJIA) taking aim at the 14,000-point mark.
The pace of hiring in January suggests businesses remain somewhat cautious about taking on new employees amid continuing budget wrangling in Washington, an increase in U.S. taxes and a global economic slowdown. Consumer-sentiment data out Friday also underscored the wary mood. At the current pace of job growth, it would take several years to drive down unemployment back to pre-recession levels below 5%.The rise in the unemployment means the Federal Reserve is unlikely to stop its massive bond-buying program anytime soon. The bank has said it will keep interest rates at an ultra-low level until the jobless rate falls to 6.5%.The Fed wants to make it easier for people to buy cars, houses and other big-ticket items to spur growth. Consumer spending accounts for as much as 70% of the U.S. economy.On the upside, hiring trends were somewhat better in 2012 and 2011 than the government’s prior analysis indicated.
The economy added 335,000 more jobs in 2012 than initially reported, boosting the monthly average to 181,000 from a prior read of 153,000, the data showed. The largest chunk of extra jobs showed up in the last three months of the year.The number of new jobs created in December was revised to 196,000 from 155,000. And November’s figure was revised up to 247,000 from 161,000 — the biggest gain in hiring in 10 months.Similarly, job growth averaged 175,000 a month in 2011, up from a prior estimate of 153,000.
“We are seeing a nice, steady increase in job growth across the board,” said Jennifer Lee, senior economist at BMO Capital Markets.Employment fell in only a few areas. Government shed 9,000 jobs, while 14,000 positions were eliminated in transportation and warehousing, possibly an offshoot of the end of the holiday season.Average hourly wages rose 4 cents to $23.78 in January. Over the past 12 months pay has risen 2.1%, just slightly faster than inflation.The average workweek was unchanged at 34.4 hours. The number, which has been flat for the past year, typically creeps higher when the economy speeds up.
What’s unclear is whether hiring will remain on an even keel. Job growth blazed ahead in the early months of 2012 and 2011, only to take a big dip by midyear.
What’s more, the economy will continue to face significant resistance in the early part of 2013. The Obama administration raised income taxes on the wealthiest Americans and a 2% payroll tax break for ordinary workers expired on Jan. 1. That could hurt consumer spending.The federal government may also cut as much as $90 billion in spending from the remaining seven months of fiscal 2013 unless Congress delays or alters a law already on the books. Analysts say that would also act as anchor on the economy.Throw in weak economies overseas — a drag for U.S. exporters — and there are few reasons to expect hiring to quicken much compared to the past two years.There are some bright spots, though. Home building is on the rise after a six-year slump and abut 100,000 construction jobs have been created in the past four months.
American businesses are also sitting on piles of cash and are ready to invest if the U.S. and global economies start to pick up. Job openings nationwide, in fact, have reached a post-recession peak.Yet until the recovery gains more steam, millions of Americans will continue to find it hard to get a good job.The number of long-term unemployed — those without work for at least half a year — was little changed in January at 4.7 million. Some 8 million workers hold part-time jobs because they can’t find a full-time position. And about 2.4 million people who want to work have stopped looking.Including all of those people, another measure of unemployment known as the U6 rate showed that 14.4% of Americans were jobless in January, the same as in December.