Report: U.S. job market looks surprisingly strong
In this Tuesday, Jan. 22, 2013 photo, job seekers fill a room at the job fair in Sunrise, Fla. U.S. employers added 157,000 jobs in January, and hiring was much stronger at the end of 2012 than previously thought, providing reassurance that the job market held steady even as economic growth stalled, according to Labor Department reports, Friday, Feb. 1, 2013. (AP Photo/J Pat Carter)
The U.S. job market is proving to be strong and raising hopes that the economy will be resilient enough this year to withstand a budget standoff in Washington and potentially deep cuts in federal spending.
Employers added 157,000 jobs last month, and hiring turned out to be healthier than previously thought at the end of 2012, just as the economy faced the threat of the “fiscal cliff.” The government issued the job figures yesterday, the same day that other reports showed stronger construction spending, increased factory production and surging auto sales. All are promising trends for 2013.
Still, unemployment remains persistently high. The unemployment rate ticked up to 7.9 percent last month from 7.8 percent in December.
Many economists, though, focused on the steady job growth – especially the healthier-than-expected hiring late last year. The Labor Department revised its estimates of job gains for November from an initial 161,000 to 247,000 and for December from 155,000 to 196,000.
The department also revised its figures for all of 2012 upward – to an average of 180,000 new jobs a month from a previously estimated 150,000.
“The significantly stronger payroll gains tell us the
economy has a lot more momentum than what we had thought,” Joseph LaVorgna, chief U.S. economist at Deutsche Bank, said in a research note.
Beyond the job market, the economy is showing other signs of health. Factories were busier last month than they have been since April 2012. Ford, Chrysler and General Motors all reported double-digit sales gains for last month, their best January in five years.
Home prices have been rising steadily. Higher home values tend to make Americans feel wealthier and more likely to spend.
Housing construction is recovering, too. Construction spending rose last year for the first time in six years and is expected to add 1 percentage point to economic growth this year.
The housing rebound appears finally to be producing a long-awaited return of construction-industry jobs, which have typically help drive economic recoveries. Over the past three months, construction has added 82,000 jobs – the best quarterly increase since 2006. Even with the gains, construction employment is about 2 million below its housing-bubble peak of 7.7 million in April 2006.
Health care employers added 28,000 jobs in January. Retailers added 33,000, and hotels and restaurants 17,000. The job growth in retail, hotels and restaurants suggests that employers have grown more confident about consumer spending, which fuels about 70 percent of the economy.
Some economists had feared that federal budget standoffs might chill spending, investing and hiring. They worried that companies wouldn’t hire and consumers would scale back spending in November and December because big spending cuts and tax increases were to take effect Jan. 1 if the White House and congressional Republicans couldn’t reach a budget deal.
It turns out, the fears were overblown. In the midst of the budget fight late last year, employers kept hiring.