(MENAFN - Arab Times) US employment grew modestly in January and gains in the prior two months were bigger than initially reported, supporting views the economy's sluggish recovery was on track despite a surprise contraction in output in the final three months of 2012. Employers added 157,000 jobs to their payrolls last month, the Labor Department said on Friday.
There were 127,000 more jobs created in November and December than previously reported. The unemployment rate, however, edged up 0.1 percentage point to 7.9 percent. The closely watched report also showed an increase in hourly earnings and solid gains in construction and retail employment.
"This is actually a really good number when you take into account the net upward revision," said Terry Sheehan, an economic analyst at Stone & McCarthy Research Associates in Princeton, New Jersey.
Stock index futures added to gains on the report, while prices for US Treasury debt traded slightly higher and the dollar extended losses against the euro. Coming on the heels of data on Wednesday showing a surprise contraction in gross domestic product in the fourth quarter, that should ease any worries the economy was at risk of recession, even though the unemployment rate ticked up.
GDP contracted at a 0.1 percent annual rate in the fourth quarter, largely because of a sharp slowdown in the pace of inventory accumulation and a plunge in defense spending. A monster storm that hit the East Coast in late October also weighed on output, a drag that should lift this quarter.
Federal Reserve officials said on Wednesday that economic activity had "paused," but they signaled optimism the recovery would regain speed with continued monetary policy support. The Fed left in place a monthly 85 billion bond-buying stimulus plan. "This shows that underneath the surface, the fourth-quarter economy was really pretty good despite all the defense cuts. I think the private sector is leading the way," said Jack Ablin, chief investment officer at BMO Private Bank in Chicago.
Economists polled by Reuters had expected employers to add 160,000 jobs and the unemployment rate to hold steady at 7.8 percent last month. Spending on US construction projects rose in December, ending a year in which construction activity increased for the first time in six years.
Rose
Construction spending rose to a seasonally adjusted annual rate of 885 billion in December, the Commerce Department said Friday. That was up 0.9 percent from November, when spending increased a revised 0.1 percent.
For all of 2012, construction spending totaled 850.2 billion, a gain of 9.2 percent from 2011, when construction spending had fallen 3.3 percent. Even with the increase, construction activity is 27.2 percent below the all-time high of 1.17 trillion set in 2006 at the peak of the housing boom.
Construction has been posting a slow recovery, led by housing gains. In December, housing and nonresidential construction posted gains but spending on government projects fell. The construction gains are helping boost the overall economy which has added nearly 100,000 jobs over the past four months.
In December, spending on residential projects rose 2.2 percent compared to November, the ninth straight monthly gain. Spending on nonresidential projects rose 1.8 percent in December after a 0.3 percent drop in November.
Spending on government projects fell 1.4 percent to 270.1 billion, the lowest level since November 2006. Government activity has been constrained by tight budgets. In December, spending on state and local government projects fell 1.7 percent while spending on federal projects was down 1.3 percent.
A measure of US manufacturing activity rose strongly in January behind faster growth in new orders and increased hiring at factories.
The Institute for Supply Management says its index of manufacturing activity jumped to 53.1 in January from 50.2 in December. It was the highest reading since April, when the index hit 54.1. Any reading above 50 indicates expansion.
