Strong US jobs growth spurs recovery hopes
WASHINGTON — US businesses shifted into hiring gear in January, creating jobs at the fastest clip in nine months, official data showed Friday amid signs the recovery from deep recession is gaining traction.
The Labor Department’s keenly awaited jobs report blew past expectations, providing a welcome shot of good news for President Barack Obama’s reelection bid.
The economy added 243,000 net new jobs in broad-based gains. The job growth was enough to pull down the unemployment rate to 8.3 percent, the lowest since February 2009, the department said.
“The economy is starting to turn the corner and the labor market is finally becoming a beneficiary of the improving economic conditions,” said Joel Naroff of Naroff Economic Advisors.
US stocks soared on the news, driving the Dow Jones Industrial Average to its highest closing level since May 2008 and the Nasdaq to an 11-year high.
Macroeconomic Advisers said it was raising its forecasts for first-quarter growth in consumer spending, the main driver of the economy.
“The flow of economic data and improving financial conditions continue to point to an economy that is likely to grow at a moderate rate in the first part of the year, with strengthening momentum for consumer spending and employment relative to recent forecasts,” it said.
But analysts cautioned against reading too much into one month’s numbers.
Echoing Federal Reserve chairman Ben Bernanke’s concerns, they warned that the ailing labor market has a long, slow road to health and faces potential setbacks, not least from a negative impact from Europe’s debt crisis.
Moody’s Analytics analyst Sophia Koropeckyj pointed to a number of challenges, including weak fiscal conditions, an expected increase in home foreclosures, the European public debt crisis, and slowing global growth.
“However, the very strong start to the year may also indicate that the US economy is more resistant to these threats than we believe,” she said.
With jobs topping the campaign agenda ahead of the November elections, Democrat Obama seized on the data to urge opposition Republican lawmakers to support an extension of a payroll tax cut for the rest of the year.
“So I want to send a clear message to Congress: Do not slow down the recovery that we’re on. Don’t muck it up. Keep it moving in the right direction,” the president said.
Leading Republican presidential candidate Mitt Romney welcomed the decline in unemployment but accused Obama of preventing “a true economic recovery.”
“We can do better,” Romney said.
The numbers were much better than analysts’ expectations. The average estimate was that the jobless rate held steady at December’s 8.5 percent rate and job creation would slow, to 155,000 jobs.
But job creation in January was the strongest since April 2011, and well up from December’s 203,000 figure.
Businesses put 257,000 jobs on their payrolls, while government layoffs, which had limited net jobs generation over the past two years, slowed to 14,000.
The average workweek in the private sector in January was unchanged from December but wages rose 0.2 percent.
Analysts cautioned that January job numbers are notorious for future revisions, but pointed to other recent positive indicators, including increases in auto sales and in closely watched surveys of manufacturing and services.
The ISM services sector index released Friday showed solid growth in new orders and jobs in January.
