Jobs gain misses target, but...

NEW YORK (CNNMoney.com) -- Job growth slowed in January, the government reported Friday, in a report that showed a labor market roughly in line with Wall Street forecasts, even if the most recent gain was a bit below expectations.

Employers added 111,000 jobs to payrolls last month, according to the Labor Department report, down from a revised 206,000 jobs in December.

Economists surveyed by Briefing.com had forecast an additional 150,000 workers on U.S. payrolls in January.

Still, there was a total of 81,000 jobs added to the previous readings for November and December, so the short-fall in January gains was more than made up by the stronger job market at the end of the year.

John Silvia said the monthly average of 171,000 jobs gain since November gives the economy good momentum moving forward and is an argument against the Federal Reserve needing to cut interest rates to spur economic growth.

"Employment continues to move ahead at a pace consistent with solid income growth and a trend-like growth for the overall economy," he said in a note to clients. "Hourly earnings continue to trend upward and reflect the relative shortage of workers in the fields of expanding demand."

The unemployment rate rose to 4.6 percent from 4.5 percent. Economists had forecast no change in that reading. The unemployment rate for those with a college degree or higher rose even more, climbing to 2.1 percent from 1.9 percent in the December reading.

The average hourly wage increased 3 cents, or 0.2 percent, to $17.09. That was less than the 0.3 percent rise forecast by economists and showed that wages are not shooting higher, despite a relatively tight labor market. The average hourly wage is up 4 percent from the year-earlier level, which beat the 2.5 percent rise in consumer prices over the course of 2006, according to a separate Labor Department reading.

"In context, these numbers are pretty good," said Robert Brusca of FAO Economics. "When you look at the revised gains together with January, we had better gains than we thought we were going to. People shouldn't put too much weight in January, which is always an odd month in terms of this report."

Stock futures turned higher in early trading following the report, suggesting investors were willing to look past the January reading and consider the revisions. But the major indexes were mixed and relatively flat just after the open. Bond prices edged higher, cutting the yield on the 10-year note to 4.82 from 4.83 percent late Thursday.

For traders looking for good news in the report, it included a combination of a solid labor market without a jump in wages that could spark inflation pressures and the possibility of interest rate hikes by the Federal Reserve.

In the January report, the Labor Department also made so-called benchmark revisions, which changed its count of U.S. workers for the period of April 2005 through March 2006, using more accurate information such as unemployment taxes rather than just a survey of employers.

The change added 813,000 workers to the estimates for that 12-month period, the biggest such change by the department dating back to the 1970s.

The department also revised the rest of 2006 up by an additional 147,000 jobs, including the 81,000-job adjustment for November and December. Together the changes left the economy with close to 1 million jobs more than previously believed. But the Labor Department had already signaled a change of this magnitude was likely in the January report.

The unemployment rate is based on a household survey, rather than the sampling of employers used to count the number of workers on payrolls. The unemployment rate was also affected by a change in the population data from the Census Bureau that the Labor Department uses in that calculation.

Found! 1 million jobs