latimes.com/business/money/la-fi-mo-jobless-report-20120203,0,3641355.story
Burst of jobs helps lower unemployment rate
By Don Lee
1:36 PM PST, February 3, 2012
Reporting from Washington
An unexpected burst of job growth last month
helped drive down the nation's unemployment rate to its lowest level in three
years, sparking a rally on Wall Street and raising hopes that the long-sluggish
labor market is rapidly gaining momentum.
Employers in the U.S. added 243,000 net new
jobs in January -- about 100,000 more than what analysts were forecasting and
the most in nine months. Job gains were broad-based, powered by robust increases
in manufacturing and solid additions in professional and business services, such
as accounting and engineering, and in the leisure and healthcare
industries.
The nationfs unemployment rate fell in January
for the fifth straight month to 8.3%, down from 8.5% in December, the Labor
Department reported. In August, the jobless figure was 9.1%.
Some economists called the latest employment
report a game-changer that signaled better times ahead for American
workers.
"This is a great surprise," said Heidi
Shierholz, an economist at the Economic Policy Institute. "It was out of context
with other things we've been seeing" in the economy, "so we canft be confident
that this is the new state of things."
Many others were cautious in their assessment,
noting that job growth was inflated by the unseasonably warm weather --
construction reported sizable gains, for instance -- and that the outlook
remains constrained by government budget cuts, financially strapped consumers
and a slowing global economy. Federal Reserve Chairman Ben S. Bernanke described
the recovery as "frustratingly slow" at a congressional hearing
Thursday.
Still many analysts and investors cheered the
report. Stocks surged Friday, with the Dow Jones industrial average ending at
its highest point since 2008.
Perhaps nowhere was the news as welcome as in
the White House. Labor Secretary Hilda L. Solis heralded the report, saying the
January data were not a one-month aberration and that the trend had been
building for some time.
Like others in the Obama administration, Solis
used the occasion to make a case for extending payroll tax cuts and emergency
jobless benefits beyond their slated expiration at the end of this
month.
There were 12.8 million unemployed workers in
January, 43% of them jobless for more than six months -- an unusually high
percentage that raises serious questions about their future ability to become
employed, as skills tend to erode over time.
Analysts say the economy needs to create at
least 100,000 net new jobs a month to keep pace with the growth in the workforce
population. But even double that number isnft that much when considering that
the nation lost on average about 360,000 jobs a month during the recession in
2008 and 2009.
Officially, the economy has been in recovery
since June 2009, but it wasnft until March 2010 that the nation began adding
jobs. With January's increase, the number of people on U.S. payrolls stands at
about 5.6 million below what it was at the start of 2008.
Patrick O'Keefe, economic research director at
J.H. Cohn, an accounting and advisory firm, said office jobs such as accounting
and bookkeeping are growing because companies are doing well and they need
business services.
But he said thatfs not the case with
consumers, many of whom remain heavily indebted and have seen their incomes and
wealth hurt by weak pay increases and the depressed housing market.
Businesses won't aggressively beef up hiring
unless they're confident they'll see stronger demand, O'Keefe said. And even
then, he added, many companies donft have to hire as many people because they
can use temporary workers or add hours for the 8.2 million part-time employees
who want full-time hours.
"Employers have a need for labor, but theyfre
tentative in their long-term commitment," he said. "They want a date but donft
want to get married."
He said, however, that there was no denying
that January produced a strong jobs report.
Manufacturing, a generally high-paying
industry, added a hefty 50,000 jobs last month, after increasing payrolls by
32,000 in the previous month. Car factories and makers of machinery, fabricated
metals and wood products all bulked up.
The robust hiring at factories reflects the
revival in U.S. auto manufacturing, which has become more competitive and has
benefited more recently from an increase in car sales.
Even so, manufacturing isn't expected to
maintain hiring at anything like last monthfs pace. For all of 2011,
manufacturing added about 20,000 jobs a month, on average.
The nationfs service sector has been slower to
rev up, but last month marked some notable gains. Professional and technical
businesses -- a big category that includes accountants, lawyers, computer
engineers and consultants -- added more than 30,000 positions. And with that,
this category of nearly 8 million workers has recovered all the jobs lost during
the recession.
Hotels and restaurants, which employ 11.6
million people, also returned to their pre-recession high in employment last
month as they increased their headcounts by 29,000. But itfs unclear whether
such growth can be sustained.
Analysts said the warm weather likely boosted
staffing in January, as it did for the construction industry, where payrolls
were up 21,000 last month on top of 31,000 in December -- the biggest
back-to-back increase for construction since 2007.
Among other services, healthcare employment
continued to expand, adding 31,000 in January. Except for one month in 2003, the
healthcare sector has increased jobs in every month over the last decade. The
temporary-help industry also grew last month.
The information services industry, however,
lost 13,000 jobs, mostly at motion-picture and sound-recording firms. Banks and
other financial services also shed a small number of positions. And government
continued to reduce staffing, though with overall cuts of 14,000, it was less
than previous months.
Copyright © 2012, Los Angeles Times