Economy begins year with solid job creation

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The Washington Post
By:  Neil Irwin
February 1, 2013

The economy began the year with solid job creation, and the labor market was much stronger at the end of 2012 than previously thought, according to new data out Friday that indicated surprising momentum in the economy in the new year.

Employers added 157,000 jobs in January, the Labor Department said, which was right in line with analyst expectations. The best news, though, was that revised estimates put job creation in November and December much higher than earlier estimated; the nation added a whopping 247,000 jobs in November and 196,000 in December, revisions that place those numbers a combined 127,000 jobs above earlier estimates.

The unemployment rate ticked up to 7.9 percent, from 7.8 percent, however, as both the number of people reporting having a job and the number looking for one edged up.

The drivers of job growth were almost surprisingly consistent. The construction sector added 28,000 jobs, following a 30,000 gain in December, suggesting that rising homebuilding activity is starting to translate into hiring of construction workers. The retail sector added 33,000 jobs, suggesting that retailers did not pull back on staffing in anticipation of their customers having less money in their pockets after a payroll tax increase in January. Two sectors that have been stalwarts of job creation over the past three years-professional and business services and health care and education-kept up that steady performance, each adding 25,000 jobs.

Even one of the sectors losing jobs was consistent. Government employment fell by 9,000, which followed a 9,000 job loss in November and 6,000 job loss in December.

Hours worked were unchanged among private-sector workers, and hourly wages rose slightly. Overall, an index of compensation for all private sector employees rose 0.4 percent in January, following an 0.5 percent rise in December.

Add it all up, and the economy seems to be holding up handily at the start of 2013, suggesting no major lingering effects from tense fiscal cliff negotiations at the end of December. It remains to be seen, however, whether tax increases to start the year that resulted from those talks will affect retail sales and other measures of economic performance in the months ahead.

In other words, nothing about the new jobs report should radically transform anyone's assessment of how the U.S. economy is performing. Job creation is steady and strong enough to bring the unemployment rate down over time-just not very quickly. The January jobs report was, more than anything, affirmation of that fact.

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This page contains a single entry by CFED published on February 1, 2013 4:22 PM.

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