The good news just keeps on coming, it seems. Indeed, just days after the Institute for Supply Management reported that manufacturing activity had ticked up in January and the government had reported that there was a gain in construction spending in December and a decline in new layoffs in the latest week, the Labor Department came out this morning with materially better payroll and unemployment figures than had been forecast.
Specifically, the government reported that 243,000 payrolls were added last month; that was nearly twice the level of new jobs expected. In all, the consensus forecast for job creation had been 125,000. Not only was this figure well above expectations, but the level of new hires was above that needed to further bring down the jobless rate, in our estimation. And on that score, the nation's unemployment rate, which had been expected to have risen from December's estimated level of 8.5% to 8.6%, instead fell further to 8.3%. December revisions meantime, were negligible, with the payroll gain being adjusted from 200,000 to 203,000 and the unemployment rate staying at 8.5%. However, November's increase in payrolls saw a significant upward revision, going from an addition of 100,000 jobs to a gain of 157,000 jobs.
Importantly, January showed the biggest increase in non-farm payrolls since last April, and the unemployment rate was the lowest since February of 2009. As noted, both the payroll number and the jobless rate confounded the experts, who had seen a deterioration in these recently better figures. Also, the number of unemployed persons fell to 11.6 million last month--a three-year low. Also, the latest jobless result showed a real decline, rather than just a shrinkage in the labor force, as had been the case earlier. So the news was unmistakably better, if not yet good, as these rates, especially the jobless figures, are still well above comfort levels.
Also, while governments continue to lay off workers, in an effort to reduce bloated public-sector spending at the federal, state, and local levels, the private sector is continuing to hire aggressively. Last month, for example, private-sector payrolls soared by 257,000, even as the respective governments pared payrolls by 14,000.
In addition, in another sign of health, average hourly earnings ticked up by four cents, or 0.2%, to $23.29. For the past year, though, the average wage increase was just 1.9%--hardly an uplifting increase. But we seem to at last be heading in the right direction. The job gains, meanwhile were in various sectors. For example, the professional business services industry added 70,000 positions last month, while employment in the key manufacturing sector jumped by 50,000 jobs. It wasn't too many months ago that employment in manufacturing had been declining. Also, job gains occurred in accounting and bookkeeping, where payrolls rose by 13,000 last month.
Clearly, this was a good report from all angles and suggests that the nation's economy could well surprise on the upside this year. Although we caution that it is early and we prefer to take a gradual approach and make incremental adjustments, as the month-to-month figures can be volatile and unpredictable. Suffice it to say, however, we appear to be headed in the right direction.