January jobs report shows growth and higher unemployment
A discouraging jobs report for January showed more jobs being created than anticipated. However, the unemployment rate ticked up a point.
Jobs report showed more job growth than expected
The U.S. Labor Department released its January jobs report on Friday, February 1. There were 157,000 jobs added to the economy, according to the report. Previously, economists had predicted that number would be closer to 155,000 new jobs. Also, the number of jobs added in November were adjusted up from 161,000 to 247,000. December’s new jobs were also upgraded from 155,000 to 196,000.
Private businesses added 166,000 in January. Another 9,000 were added by local and state governments.
Wages also increased
The report also showed that wages had gone up by 4 cents an hour. Some say that may be a continuing, needed trend.
“It may be that we are now getting to a point in the labor market where we are going to see an upward creep in average hourly earnings,” said John Ryding, chief economist at RDQ Economics in New York. “That’s going to be good for the consumer and they need help because they are being whacked by the payrolls tax increase.”
Unemployment rate goes up
Construction and retail hires were also up. However, all these factors were not enough to keep the unemployment rate from rising from 7.8 percent to 7.9 percent.
Tom di Galoma, managing director at Navigate Advisors LLC, said, “This jobs figure today indicates that the engine of the economy is revving, but the car isn’t going anywhere.”
A contraction in the economy
Earlier this week, a new report from the U.S. Department of Commerce showed that the nation’s gross domestic product contacted to an annual growth rate of 0.1 percent in the final quarter of 2012. It was the fist time that has happened since 2009, when the Great Recession was drawing to a close.
The Bureau of Labor Statistics also said earlier this week that Unemployment Insurance weekly claims rose by 38,000 from the previous week.
White House says economy is still improving
Alan Krueger, chairman of President Obama’s Council of Economic Advisers, reacted to the report, saying that the job and hiring growth indicates the economy is still moving toward health, in spite of the uptick in unemployment. To avoid further erosion of its recovery, he suggested that Congress replace the massive spending cuts due on March 1 with fewer cuts and some increased tax revenue. However, Congressional Republicans, disgruntled by the increased taxes on the rich imposed on January 1, say they will not budge on further tax hikes.