WASHINGTON, Feb. 7 (UPI) — The Labor Department said Friday that the nation’s employers added the largest amount of new jobs to their payrolls in 26 months during January, pushing the overall unemployment rate down from its highest level since August 1994.
The government agency the unemployment rate dropped to 5.7 percent from 6 percent as the economy created 143,000 non-farm jobs during the first month of 2003 after losing a revised 156,000 jobs during the final month of 2002 and losing 88,000 jobs during last November.
The Labor Department, which had originally reported the December non-farm job loss as 101,000 positions, noted January’s gain was the biggest job growth since November 2000, and the first since October.
The report showed excluding 101,000 positions that were added in the retail sector, the overall economy only added 42,000 non-farm jobs in January.
Economists on Wall Street were expecting the unemployment rate in January to remain at 6 percent and non-farm payrolls were expected to grow by 68,000 during the month.
Analysts said the decline in the unemployment rate and the improvement in job growth suggested the labor market may be stabilizing.
Amid sluggish economic growth and worries about the consequences of a U.S. war with Iraq, employers have cut more than 2 million jobs over the last two years.
Forecasters widely expect economic growth to remain sluggish this year, and they had been expecting the unemployment rate to rise as high as 6.5 percent by the middle of 2003.
To ensure faster growth, President George W. Bush last month unveiled a $674 billion economic-stimulus package his administration estimates will create 1.5 million jobs and expand the gross domestic product by nearly 2 percent in 2004.
But the Federal Reserve has shown no inclination to give the economy more stimulus — the central bank decided last week to hold its key interest rate at a 42-year low of 1.25 percent.
Analysts said the nation’s economy needs to create 100,000 to 150,000 new jobs a month to reduce joblessness. In the early stages of recovery though, the economy needs to create more than 250,000 new jobs per month.
The unemployment rate measures the number of unemployed as a percentage of the labor force. Nonfarm payroll employment counts the number of paid employees working part-time or full-time in the nation’s business and government establishments.
The report also measures the average workweek, which reflects the number of hours worked in the nonfarm sector. Average hourly earnings reveal the basic hourly rate for major industries as indicated in nonfarm payrolls.
Analysts said if ever there was an economic report that can move the markets, this is it! The anticipation on Wall Street each month is palpable, the reactions are dramatic, and the information for investors is invaluable.
By digging just a little deeper than the headline unemployment rate, investors can take more strategic control of their portfolio and even take advantage of unique investment opportunities that often arise in the days surrounding this report.
The employment data gives the most comprehensive report on how many people are looking for jobs, how many have them, what they’re getting paid and how many hours they are working.
These numbers are the best way to gauge the current state and future direction of the economy. They also provide insight on wage trends, and wage inflation is high on the list of enemies for the Federal Reserve.
Fed chairman Alan Greenspan talks about this data frequently and watches for inflation constantly.
By tracking the jobs report, investors can sense the degree of tightness in the job market. If wage inflation threatens, it’s a good bet that interest rates will rise, bond and stock prices will fall. No doubt that the only investors in a good mood will be the ones who watched the employment report and adjusted their portfolios to anticipate these events.
The latest report from the Labor Department showed the percentage of workers that are unemployed for 27 weeks or more fell to 19.5 percent last month from 22.7 percent. The percentage was 13.8 percent a year ago.
The private workweek inched up to an average 34.2 hours during the month from 34.1 hours in December and 34.2 hours in November.
The average hourly earnings were unchanged at $14.98 during the month after increasing 0.3 percent, or 5 cents, in December and rising 0.2 percent in November.
The report showed the nation’s construction industry added 21,000 jobs during the month, up from a 3,000 gain in December.
The services-producing industry, which includes retail trade, added 143,000 jobs. But, the manufacturing industry continued to lose jobs. The Labor Department said it lost 16,000 jobs in January after a 80,000 decline in December.
The government added 4,000 jobs.