Wednesday, May 23, 2018

U.S. jobless rate falls to 8.3 percent

WASHINGTON — In a long-awaited surge of hiring, companies added 243,000 jobs in January — across the economy, up and down the pay scale and far more than just about anyone expected. Unemployment fell to 8.3 percent, the lowest in three years.

The job growth was the fastest since last March and April. Before that, the last month with stronger hiring, excluding months skewed by temporary census jobs, was March 2006.

The unemployment rate came down by two notches from December. It has fallen five months in a row, the first time that has happened since 1994, two economic booms and two recessions ago.

"The economy is growing stronger," President Barack Obama said. "The recovery is speeding up."

Indeed, the report Friday from the Labor Department seemed to reinforce that the nation is entering a virtuous cycle, a reinforcing loop in which stronger hiring leads to more consumer spending, which leads to even more hiring and spending.

On Wall Street, where investors had already driven stocks to their best start in 15 years because of optimism about the economy, the jobs report triggered a spasm of buying.

The Dow Jones industrial average climbed 156.82 points, its second-best showing this year, and finished the day at 12,862.23, its highest close since May 2008, four months before the financial crisis struck.

The Nasdaq composite index finished at its highest level since December 2000, during a steep decline after the dot-com stock craze. Money poured out of bonds, which are considered less risky than stocks, and bond yields rose.

"Virtually every economist on the planet had expected a drop in the rate of job gains in January, which makes today's upward surprise even more surprising," Dan Greenhaus, chief global strategist at the brokerage BTIG, said in a note to clients. In December, 203,000 jobs were created.

The impressive jobs report reverberated through the presidential campaign and could improve Obama's re-election prospects. The drop in the unemployment rate put it exactly where it was in February 2009, the month after Obama took office.

In Arlington, Va., the president argued that now was no time to let a 2-percentage-point cut in the Social Security payroll tax expire, as it will if Congress doesn't take action by the end of the month. The tax cut reaches 160 million Americans.

Of the economic recovery, he said: "We've got to do everything in our power to keep it going. We can't go back to the policies that led to the recession, and we can't let Washington stand in the way of the recovery."

His Republican foes used the numbers to argue that the pace of improvement was not good enough. "We can do better," said former Massachusetts Gov. Mitt Romney, the Republican front-runner. "These numbers cannot hide the fact that President Obama's policies have prevented a true economic recovery."

Unemployment was 6.8 percent when Obama was elected, 7.8 percent when he was sworn in and 10 percent, its recent peak, nine months later. No president since World War II has won re-election with unemployment higher than 7.2 percent.

The 243,000 jobs added far exceeded the estimate by economists of 155,000, according to FactSet, a provider of financial data. Some surveys of economists came in even lower.

Government revisions to previous months' totals were another encouraging sign. Hiring was stronger in November and December by 60,000 jobs than first estimated.

The government also issued its annual revisions to jobs data going back five years. They showed that hiring was stronger over the past two years than previously thought. The economy added about 1.82 million jobs last year, compared with an original estimate of 1.64 million.

"This is a very positive employment report from almost any angle," said Brian Bethune, an economics professor at Amherst College.

Economists said the report probably makes it less likely that the Federal Reserve will take additional steps to help the economy soon, such as the massive bond-buying programs it launched in 2008 and 2010. That was another reason bond prices fell after the report was released.

Even with January's gains, the job market is a long way from full health. The nation has about 5.6 million fewer jobs than it did when the Great Recession began in December 2007.

Employers have added an average of 201,000 jobs a month the past three months. That's 50,000 more than the economy averaged each month last year.

Still, 11 million people either have stopped looking for jobs or are working part time and would rather work full time. When those people are added to the 12.8 million unemployed, nearly 24 million are considered underemployed. The so-called underemployment rate edged down in January to 15.1 percent, from 15.2 percent.

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