In the January jobs number it's the upside surprise that counts

02/03/2012 7:12 pm EST


Jim Jubak

Founder and Editor,

Not just a good U.S. jobs number for January this morning but a surprisingly good jobs number. The U.S. economy added 243,000 jobs in January, up from a gain of 220,000 jobs in December. The private sector added 257,000 jobs in the month. Over the last three months the U.S. private sector has added 655,000 jobs.

Economists analyzing December’s data had pointed out that about 40,000 temporary workers hired by UPS and FedEx in December to delivery holiday packages would probably be let go in January. That would put a big drag on the January jobs number, economists reasonably concluded. Going into today’s release from the Bureau of Labor Statistics, economists surveyed by were expecting nonfarm payrolls to climb by 168,000.

The January jump in jobs looks to be connected to a recent drop in layoffs. Business layoffs fell to a three-year low in January. Governments at all levels are also slowing their pace of jobs cuts. The government sector lost just a net 14,000 jobs in January, compared to a net loss of 17,000 jobs in December, 21,000 in November, and 27,000 in October. (Looks like a trend to me. And if government layoffs really have peaked and started down, that would be a significant boost to net job growth in future months.)

The official unemployment rate dropped to 8.3% in January from 8.5% in December. Part of that drop is a result of job increases but part is due to a puzzling drop in the labor participation rate to 63.7% in January from 64% in December. I haven’t yet seen a convincing explanation of why more workers would drop out of the work force when the labor market is improving.

The data was also encouraging for investors looking to see if consumers have more money in their pockets to spend—so that U.S. economic growth could continue to confound economists focused on the effects of a slowing European economy on global growth. Hourly earnings climbed 0.2% in January (after a 0.1% increase in December.) The average workweek remained at December’s 34.5 hours (although the December number itself was revised upward from last month’s release.) That all added up to a 0.4% increase in aggregate income.

What I call the full unemployment rate, which includes part-time workers who would like a full-time job and workers who have given up looking for work dropped to 15.1% in January from 15.2% in December.

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