WASHINGTON — Friday’s surprisingly strong January jobs report prompted hope that the economy’s recovery is finally kicking into high gear.
“It feels like businesses are finally looking to expand their operations, which means more hiring,” said Mark Zandi, chief economist for Moody’s Analytics, a forecasting and consulting firm. “The lack of hiring has been the missing link in this recovery. We may have found the missing link.”
Employers added a better than expected 243,000 non-farm payroll jobs in January and the unemployment rate fell to 8.3 percent, the Bureau of Labor Statistics reported Friday. Private-sector employers actually added 257,000 jobs in January, but the national total was dragged down by 14,000 lost government jobs.
Most encouraging was the broad nature of job gains. Manufacturing added 50,000 posts, and professional and business services — many of them well-paid white-collar jobs — posted the largest gain, 70,000 new jobs.
Even the hard-hit construction sector improved, adding 21,000 jobs.
“It is a fantastic jobs report, not a single blemish,” said Zandi. “Jobs were up big, and unemployment was down big. All the leading indicators in the report suggest continued solid job growth at least into the spring.”
The unemployment rate fell another two-tenths of a percentage point to 8.3 percent — the fifth straight month that the unemployment rate dropped. It was at 9.1 percent as recently as August.
Wall Street investors sent stocks soaring. The Dow Jones Industrial Average rose 157 points, or 1.23 percent, to close at 12,862. The NASDAQ rose 46 points, or 1.61 percent, to close at 2,906. The Standard & Poors 500 rose 19 points, or 1.46 percent, to close at 1,345.
“The real stimulant to future economic growth is the ‘boost in confidence’ this report provides to the roughly 92 percent of the work force (that) already has a job,” said James Paulsen, chief investment strategist for Wells Capital Management, in a research note.
Over the past three months, employers have averaged job creation above 200,000; this trend mirrors strong recent data on manufacturing, car sales and improving consumer sentiment.
Adding weight to that view, new data Friday showed that December factory orders were up modestly and a closely watched index of non-manufacturing activity shot up 3.8 percentage points.
President Barack Obama welcomed the numbers during an appearance at a suburban Washington fire station in Arlington, Va.
“The numbers came down because more people found work … these numbers will go up and down in coming months … but the economy is growing stronger, the recovery is speeding up,” he said.
The president pressed Republicans in Congress to support the economy by extending the payroll tax holiday that is set to expire at the end of this month.
“They’ve got to renew the payroll tax cut they’ve extended and do it without drama, without delay, without linking it to some ideological side issue,” Obama said. “Now is not the time for self-inflicted wounds for our economy. Don’t muck it up — keep it moving in the right direction.”
House Speaker John Boehner, R-Ohio, blamed Democrats for holding up the payroll tax extension, and in a statement, he gave a qualified thumbs-up for the January numbers.
“There’s welcome news in this latest jobs report as more Americans found work last month, but the fact is our unemployment rate is still far too high,” Boehner said. “Our economy still isn’t creating jobs the way it should be, and that’s why we need a new approach.”
Weather factors contributed. In a note to investors, Steve Ricchiuto, chief economist of Mizuho Securities, said sharp weather swings late last year and in January have skewed the numbers. Still, he said, “the (unemployment) claims data does, however, suggest that payrolls should be growing by 175 K instead of last year’s 125 K,” he said.
Whatever the pace, the trend is clearly improving, and importantly, across all sectors.
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