In a second month of surprising gains for the U.S. jobs market, the Labor Department on Friday reported that the economy added 243,000 jobs in January, for a drop in the unemployment rate to 8.3% from December’s 8.5%.
Unemployment is now at its lowest point since President Barack Obama’s first full month in office, February 2009, and Friday’s report is sure to win attention for Obama in his presidential bid for re-election in 2012.
The Bureau of Labor Statistics’ U.S. jobs report surprised analysts, who believed that the economy would add only 140,000 jobs last month.
Stocks rose across the board after the report’s release, with the Dow Jones Industrial Average up more than 150 points in midday trading, at 12,858. The S&P 500 was up 17 points, at 1,342.
“Job growth was widespread in the private sector, with large employment gains in professional and business services, leisure and hospitality and manufacturing,” the BLS reported. “Government employment changed little over the month.”
Economists viewed the February jobs report as an overall positive, though they did pick out weak points.
“This is a game-changer,” said Ian Shepherdson, chief U.S. economist for High Frequency Economics Ltd., in Valhalla, N.Y., in an analyst note. “Right on cue, with both jobless claims and small business activity back close to their January 2011 level, payrolls have surged to the same pace recorded in February to April 2011.”
However, Shepherdson warned, the downside is that if these numbers continue, unemployment will fall much further and faster than the Federal Reserve expects, “so the chance of rates staying at zero through the end of 2014 is much smaller than they think.”
Steve Blitz, senior economist with New York-based ITG Investment Research, questioned “plenty of bits and pieces of the report” that are likely skewed to the upside by seasonal adjustments.
“How else to explain a 21,000 increase in construction (9,700 in nonresidential specialty trade contractors), 19,400 hired by department stores and 32,800 by food services and drinking places when construction figures are still depressed and consumer spending has been relatively weak,” Blitz wrote in an analyst note.
But Blitz conceded that the overall employment situation is improving and manufacturing is leading the way. In January, he noted, manufacturing employment was up 50,000 and mining employment was up 9,000. The multiplying impact of producing more is seen in the 11,3000 rise in wholesale employment for durable and nondurable goods and the 13,100 increase in transportation employment, he said.
“While the number of people necessary to build a widget isn’t what it was, the increase in the number of widgets produced does translate into more jobs for those that get widgets to the wholesale market, sell them there, and account for the number produced and sold,” Blitz wrote.
Read about the U.S. jobs report for December at AdvisorOne.com