LITTLE ROCK — American employers added 157,000 jobs in January compared with a revised 196,000 jobs the previous month, the Labor Department reported Friday. The unemployment rate rose slightly to 7.9 percent, about where it has been stuck since September.
On the bright side, revised government data showed that the economy added 335,000 more jobs than originally estimated during all of 2012, including an additional 150,000 in the last quarter of the year. That was on top of the previously reported fourth-quarter job growth of 603,000 and 2012 growth of 2.2 million.
The higher revisions, in particular, encouraged traders on Wall Street, sending the Dow Jones industrial average over the 14,000-point mark for the first time since 2007.
Still, job growth has been modest compared with previous recoveries, and economists saw little in January’s report to suggest that hiring would pick up soon.
“I think it’s going to be a tough slog here,” said Joshua Shapiro, chief U.S. economist for MFR Inc. “There are plenty of head winds out there for the economy. The cost of hiring somebody is great, with benefit costs and everything, and unless companies really absolutely need someone, they’re not going to hire.”
Construction has been one of the more encouraging sectors, adding jobs each of the past four months. The hiring there was probably because of a combination of rebuilding from superstorm Sandy, unseasonably warm weather that led to fewer work stoppages, and the nascent housing recovery, said Ian Shepherdson, chief economist at Pantheon Macroeconomic Advisors.
Retailing, health care and the wholesale trade also added positions in January, while the government again shed jobs. Government payrolls have been shrinking most months over the last four years.
The January jobs numbers were close to what economists had forecast, although many had hoped for an upside surprise. Recent weeks have brought a slew of gloomy economic data, showing that the nation’s output unexpectedly shrank at the end of 2012 and that consumers were becoming increasingly pessimistic about their finances and job prospects.
Debate in Washington over the budget and higher tax rates that kicked in last month could further dampen consumer confidence and hiring early this year.
“The combination of eliminating the payroll-tax forgiveness along with continued stagnation in wages, I think, could be a real hit in terms of jobs,” said Christine Owens, executive director at the National Employment Law Project, a labor advocacy and research group. “If you add in sequestration” - the across-the-board cuts to federal spending currently scheduled for March 1 - “that paints a pretty bleak picture.”
Friday’s report was “a reminder of the importance of the need for Congress to act to avoid self-inflicted wounds to the economy,” said Alan B. Krueger, the chairman of President Barack Obama’s Council of Economic Advisers.
The revisions for the fourth quarter would seem to disprove accusations that the Obama administration had inflated job growth ahead of the November election, since the original estimates were recalculated to show there was even more growth.
Still, job growth has been steady but uninspiring in the last year, trudging along just barely fast enough to keep up with population growth but not nearly quickly enough to put a major dent in unemployment; 12.3 million workers remain idle.
Uncertainty over fiscal policy and the fragility of the economy still seem to be holding back employers, despite a number of underlying sources of growth in places like the housing market and auto sales. Economists are forecasting job growth of around 170,000 a month for the rest of 2013, comparable to the past year.
Exactly what this pace of job growth means for the unemployment rate depends on whether many of the workers sitting on the sidelines decide to join, or rejoin, the labor force. Right now, labor force participation rates - that is, the share of people of working age who are either working or looking for jobs - is hovering around 30-yearlows.
Only those who are actively looking for work are counted as unemployed, so if the labor force participation stays low, even modest job growth can cause the unemployment rate to fall quite a bit.
“The decline in the labor force participation rate brought the unemployment rate down much faster than anyone would have thought, given the jobs numbers,” said John Ryding, chief economist at RDQ Economics. “The aging of America accounts for a little bit of it, but you’d still expect that job searches would go up and participation would rise as opportunities are opening up.”
Business, Pages 29 on 02/02/2013