Payroll Gains in Recent Months Show Progress in U.S. Jobs Market
Companies kept expanding headcounts in January and revisions to previous months’ showed even bigger gains as the U.S. job market made further strides.
Payrolls increased by 157,000 workers following a revised 196,000 gain the prior month and a 247,000 jump in November, Labor Department figures showed yesterday. Revisions added 127,000 jobs to the tally in the last two months of 2012. A separate survey of households showed the unemployment rate unexpectedly rose to 7.9 percent from 7.8 percent.
Brighter employment prospects, which will help lessen the pain for consumers of a higher payroll tax, sent the Dow Jones Industrial Average (INDU) above 14,000 for the first time since 2007. At the same time, a jobless rate that Federal Reserve policy makers have said remains too high means the central bank is likely to keep pumping money into financial markets.
“The economy continues to turn over and create jobs on a long, steady path,” said Kevin Logan, chief U.S. economist at HSBC Securities USA Inc. in New York. “If the unemployment rate weren’t so high, growth might seem satisfactory because it’s slow and steady, but we’re still several millions jobs short of where we were when the recession started. The Fed would like to see things accelerate, probably closer to 220,000 jobs a month, which would be a sign of more substantial improvement.”
The U.S. has recovered 5.51 million of the 8.74 million jobs that were lost as a result of the recession that began in December 2007 and ended in June 2009.
The Labor Department yesterday also issued its annual benchmark update, which aligned employment data spanning April 2011 to March 2012 with corporate tax records. The revision showed payrolls grew by an additional 424,000 workers, on an unadjusted basis, in that period.
Combined with the updates for November and December, the revisions put payroll employment at the end of 2012 at 134.7 million workers, 647,000 higher than previously estimated.
The figures were “an encouraging sign for the U.S. economy,” Federal Reserve Bank of St. Louis President James Bullard said in an interview yesterday in Washington. Payroll gains averaging about 200,000 jobs over the past three months are “impressive” and support his forecast that economic growth will accelerate to about 3 percent this year, he said.
That job growth at the end of 2012 was stronger than first estimated also showed the economy wasn’t as weak as suggested by recent figures on the nation’s gross domestic product. GDP unexpectedly fell at a 0.1 percent annual rate in the fourth quarter, the worst reading since the recession ended in 2009, according to Commerce Department data out earlier this week.
The median forecast of 90 economists surveyed by Bloomberg projected payrolls would climb 165,000 in January. Projections ranged from increases of 115,000 to 230,000 after an initially reported 155,000 gain in December.
The unemployment rate was forecast to hold at 7.8 percent in January, according to the Bloomberg survey median. Estimates ranged from 7.6 percent to 7.9 percent.
The uptick in joblessness gives bond yields room to decline amid the Treasury market’s worst annual start since 2009 while signaling that the Fed may maintain its easing stance for some time, said Bill Gross, manager of the world’s biggest bond-fund.
“They will still be writing checks, and it will probably continue for a while,” the Pacific Investment Management Co. founder said yesterday in a radio interview on “Bloomberg Surveillance” with Tom Keene.
Hiring gains in January were led by health-care providers, retailers and construction companies. A 28,000 increase for builder payrolls capped the strongest three-month gain in that industry since April 2006.
Lowe’s Cos. (LOW), the second-largest U.S. home-improvement retailer, has benefited from a recovery in the housing market and is hiring. The Mooresville, North Carolina-based company said Jan. 22 it will take on 45,000 seasonal workers, 13 percent more than a year earlier, and add 9,000 permanent employees.
The employment report also contained hopeful signs for the long-term unemployed. The average duration of joblessness fell by almost three weeks to 35.3, the lowest since December 2010.
Hourly earnings rose 0.2 percent for all workers on average last month to $23.78 from $23.74 in December, the report showed. They climbed 2.1 percent from January 2012, matching the December increase as the biggest since March.
The so-called underemployment rate -- which includes part- time workers who’d prefer a full-time position and people who want work but have given up looking -- held at 14.4 percent.
Ryan Tiffany, a 31-year-old who lost his finance job in August, felt better about quickly landing new employment as the economy showed signs of improving. He began work last month at Paramount Solar, where he is a solar-power sales specialist.
“I was more nervous about not finding the right fit,” Tiffany of Roseville, California, said about his job search, which he extended to make sure he found the right workplace environment. He said he now feels more financially secure, and he and his fiancé are saving up to buy a house.
President Barack Obama’s administration used the jobs report as an opportunity to advocate against steep budget cuts.
“What we see is a job market that’s healing, but it’s not back to full health,” Alan B. Krueger, chairman of the White House Council of Economic Advisers, said yesterday during an interview on Bloomberg Television. “It’s extremely important that we continue to build on this recovery.”
Congress must “act to avoid self-inflicted wounds to the economy” as it struggles to avert $85 billion in across-the- board cuts scheduled to take effect on March 1, Krueger said in an e-mailed statement.
Lawmakers on Jan. 1 allowed the payroll tax that funds Social Security benefits to revert to 6.2 percent from 4.2 percent and boosted the levy on top income earners. Congress is now debating how to approach the automatic spending reductions that would further crimp growth.
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