Job creation saw a big jump in January with 243,000 new jobs added. This helped lower the unemployment rate to 8.3%. These numbers blew away estimates of 150,000 and an unemployment rate of 8.5%. Stocks rallied on this news with the major indexes all up about 1% or more.
“What’s not to like about the report?” said Andrew Wilkinson, chief economic strategist at Miller Tabak in New York. “Not only did payrolls exceed forecasts…but between the November and December revisions employers added 160,000 more jobs than first thought.”
According to the report released this morning, the work week remained unchanged at 34.5 hours while wages rose $0.04 on average an hour to $23.39.
Labor-force participation fell last month to 63.7%, the lowest since May 1983. 1.25 million fewer people are in the workforce in December. Analysts focus on these numbers because it could mean the drop in the unemployment rate isn’t really a drop.
“Looking beyond these statistical quirks, watching the unemployment rate drop five months in a row is rare event, and our expectation is that the unemployment rate rises in the immediate-term,” said Neil Dutta, economist at Bank of America Merrill Lynch.
The primary job gains came from the service sector in January. This includes retail and the food and beverage industries. The service sector added 162,000 of the 243,000 jobs last month.
This also has political ramifications as well with this being an election year. “The pattern is definitely indicating the economy is improving,” Alan Kreuger, chairman of President Obama’s Council of Economic Advisors, told CNBC. Republicans on the other hand balked at the numbers saying the economy is still in need of repair.