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Saturday, February 2, 2013 - Page updated at 09:00 p.m.
Dow back at 14,000, spurred by upbeat jobs data
By CHRISTOPHER S. RUGABERPAUL WISEMAN
The Associated Press
WASHINGTON — The U.S. job market is proving surprisingly strong — raising hopes that the economy will be resilient enough to withstand a budget standoff in Washington and potentially deep automatic cuts in federal spending.
Employers added 157,000 jobs last month, and hiring turned out to be healthier than previously thought at the end of 2012 just as the economy faced the threat of the “fiscal cliff.”
Still, unemployment remains persistently high. The unemployment rate ticked up by a tenth of a point to 7.9 percent last month.
Many economists, though, focused on the steady job growth — especially the healthier-than-expected hiring late last year. The Labor Department revised its estimates of job gains for November from an initial 161,000 to 247,000 and for December from 155,000 to 196,000.
The department also revised its figures for all of 2012 upward — to an average of 180,000 new jobs a month from a previously estimated 150,000.
“The significantly stronger payroll gains tell us the economy has a lot more momentum than what we had thought,” Joseph LaVorgna, chief U.S. economist at Deutsche Bank, said in a research note.
The government frequently revises the monthly job totals as it collects more information. Sometimes the revisions can be dramatic, as in November and December.
The report helped fuel a powerful rally on Wall Street. Stock averages all jumped more than 1 percent. The Dow Jones industrial average closed above 14,000 for the first time since October 2007, two months before the Great Recession officially began.
Beyond the job market, the economy is showing other signs of health. Factories were busier last month than they have been since April 2012. Ford, Chrysler and General Motors all reported double-digit sales gains for last month, their best January in five years.
Home prices have been rising steadily. Higher home values tend to make Americans feel wealthier and more likely to spend.
Housing construction is recovering, too. Construction spending rose last year for the first time in six years and is expected to add 1 percentage point to economic growth this year.
Some economists had feared that federal budget standoffs might chill spending, investing and hiring. It turns out those fears were overblown. In the midst of the budget fight late last year, employers kept hiring.
Friday’s report did serve as a reminder that unemployment has been stuck at 7.8 percent or more since September. The rate would be even higher if many Americans hadn’t retired or stopped looking for work. If labor-force participation were still at its prerecession level, unemployment could exceed 11 percent.
And despite the consistent hiring gains, the job market has a long way to go to fully heal from the recession. Between January 2008 and February 2010, the United States lost 8.7 million jobs. Since then, it’s regained 5.5 million — 63 percent of the lost jobs.
Yet the burst of hiring at the end of 2012 has raised hopes.
“This could be a breakout year for the economy,” Bernard Baumohl, chief global economist at the Economic Outlook Group, wrote in a note to clients. “The economy, sales, employment and the stock market are all higher in spite of the bickering and rancor in Washington.”
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