Comprehensive report on the economy (by the numbers) as of February 1, 2013

By Jeffrey Sparshott And Eric Morath

Employers added 157,000 jobs last month, the Labor Department said Friday. The unemployment rate, obtained by a separate survey of U.S. households, ticked up one-tenth of a percentage point to 7.9%.

While the pace of job creation was slower than expected in January, revisions to payroll data suggest that the economy has been doing better than initially thought. For all of last year, the economy added an average of 181,000 jobs a month according to updated figures—better than the 153,000 pace originally reported. Underscoring that improvement, November and December payrolls were revised upward by a combined 127,000 jobs—to 247,000 in November and 196,000 in December.

 

Markets jumped on the news. The Dow Jones Industrial Average was up 93 points, or 0.7%, to 13953 minutes after the opening bell. The S&P 500 rose 0.6%.   Still, economists cautioned against too much excitement.

The "January employment report was as we expected, pretty good but not fantastic," said Eric Green, global head of research at TD Securities.

The stronger November and December numbers offer some relief after the
government this week reported that the economy shrank in the final three months of 2012.

For the whole year, economic activity expanded only 2.2% in 2012, a fairly meager pace that may be repeated in 2013. The housing industry is rebounding and business investment appears solid, but government cutbacks have weighed on the economy and consumer attitudes have soured. That has led many economists to forecast a slow start to 2013, followed by faster growth in the second half.

The change to last year's payroll numbers in part reflects the Labor Department's annual benchmark revision, which incorporates newly available tax records. From April 2011 to March 2012, the economy added about 422,000 more jobs than previously believed.

Still, payrolls didn't rise fast enough to dent the unemployment rate last month, which showed that 12.3 million Americans who wanted a job couldn't find one. The rate increased in part because more people entered the workforce.

"The overall tone of this report was largely in keeping what we have been seeing, namely modest job growth and a stubborn unemployment rate," said Joshua Shapiro, chief U.S. economist at MFR Inc.

The unemployment rate remains well above the 6.5% threshold the Federal Reserve is targeting before allowing interest rates to rise. The Fed this week continued its easy-money policies in hopes of stimulating growth. [pumping 40 billion dollars per month into the financial system,  most of which is being gobbled up by investors on Wall Street]. 

Friday's report showed that private companies added 166,000 jobs during January, accounting for all the month's gains. Employment increased in retail, construction, health care and wholesale trade. Manufacturing saw a small gain of 4,000 jobs.

Payrolls shrank in the transportation and warehousing industries.

Governments, meanwhile, shed 9,000 jobs. The federal workforce shrank by 5,000  and the overall workforce lost another 164,000 people,  most to Social Security retirement.  The total of folks no longer being counted in labor statistics is 8.8 million.

Average earnings rose by 4 cents to $23.78 an hour, while the average workweek was unchanged at 34.4 hours.

[Unemployed and underemployed held steady at 14.4% in January]. 

Source: Wall Street Journal.  You will want to read the full article.