January jobs report: Hiring ramps up, unemployment falls

@CNNMoney February 3, 2012: 10:27 AM ET
The U.S. economy added 243,000 jobs in January, marking the strongest job growth since April.

The U.S. economy added 243,000 jobs in January, marking the strongest job growth since April.

NEW YORK (CNNMoney) -- American employers substantially stepped up their hiring in January, bringing the unemployment rate down for the fifth month in a row.

Employers added 243,000 jobs in January, the Labor Department reported Friday, marking a pick-up in hiring from December, when the economy added 203,000 jobs.

Meanwhile, the unemployment rate fell to 8.3%. That is the lowest since February 2009.

Hiring was much stronger than expected, and once it was apparent the job gains were broad based across several sectors, economists and investors called it a "nice surprise," "fantastic," and even "a touchdown!" Stocks climbed at the market open.

Economists surveyed by CNNMoney had forecast 130,000 jobs added in the month, and that the unemployment rate likely ticked up to 8.6%.

"To show the economy adding this kind of jobs number in a January is amazing," said Kathy Kane, senior vice president of talent management at Adecco Group North America. "As we talk to clients, they're very optimistic about continuing to hold jobs throughout the year but also to increase jobs."

"This is an optimistic jobs report, especially in light of very poor jobs reports for almost three years," said Brian Hamilton, CEO of Sageworks, a financial information company. "We don't know if the positive jobs trend will continue, but it is definitely a good trend."

The encouraging news was coupled with revisions to the Labor Department's data, showing the economy added 180,000 more jobs than originally thought in 2011.

Private businesses have been adding jobs consistently since March 2010. In January, they added 257,000 jobs.

Small firms want more from Obama's U.S. manufacturing plan

The manufacturing sector -- a focal point of President Obama's latest jobs speeches -- added 50,000 jobs in January. Manufacturing has accounted for 14% of the job gains in the last 13 months.

Professional and business services added 70,000 jobs, and education and health services added 36,000 jobs.

But the government has also been bleeding jobs since the middle of 2010, and continued to do so last month. Most of the recent job losses have been at the state and local level. Overall, the public sector cut 14,000 jobs in January.

The unemployment rate is obviously a highly politicized number. While gradual improvement in the job market may strengthen President Obama's position, major weakness still remains.

"I suspect the White House will be happy the unemployment rate is down, but they also have to be mindful that we still have a long way to go here," said Chad Moutray, chief economist with the National Association of Manufacturers.

The economy still needs to add about 5.6 million jobs to get back to 2008 employment levels, and it's unclear if stronger job growth lately can continue.

Only 36% of executives recently surveyed by the Corporate Executive Board expect to increase their total headcount in 2012.

"Even though we've seen the outlook improve in the last few months, there's still a lot of risk and uncertainty out there in the business environment," said Michael Griffin, executive director and head of global research for CEB. "Generally speaking, we see executives developing a cautious posture."

Europe's debt crisis continues to rattle employers' nerves, the housing sector remains a drag, and uncertainty surrounding fiscal policies like the extension of the payroll tax hangs in the air, said Joel Prakken, chairman of Macroeconomic Advisers.

Amid those uncertainties, the Federal Reserve last week said it forecasts the unemployment rate to remain between 8.2% and 8.5% in 2012. Fed chairman Ben Bernanke continues to characterize the recovery as "frustratingly slow."

Check the unemployment rate in your state

Meanwhile, certain demographic groups still are burdened with ultra-high unemployment rates. While the black unemployment rate fell substantially from 15.8% to 13.6% in January, it still remained far above the unemployment rate for whites, which is 7.4%.

Latinos had a 10.5% unemployment rate.

Of the 12.8 million Americans who remain unemployed, 42.9% have been so for six months or more. To top of page

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