The U.S. jobs horizon brightened at the start of the New Year.
The unemployment rate dropped close to a three-year low of 8.3% in January, down from 8.5% at the end of last year.
Meanwhile, job creation saw its biggest jump in nine months. Non-farm payrolls grew by a bigger-than-expected 243,000.
Job growth in November and December was also stronger than first announced by the Labor Department. A warmer than normal winter is likely a factor.
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While the numbers are good, the labor market still isn’t back to full health, says John Lonski, Chief Economist of Moody’s Analytics:
“I think the labor market is indeed doing better than what had been anticipated, but the reality is that we’re still down by more than five million jobs from where we were at the end of 2007. So granted that recent jobs creation has exceeded expectations, the reality is that we still have a large number of unemployed Americans out there.”
But other economists are reading the numbers more optimistically. Stuart Hoffman, Chief Economist of PNC Financial, is calling the report a “watershed” moment, pointing out that two million private sector jobs were created last year:
“We still could be doing a lot better than that. We’ve also now seen five months in a row where the unemployment rate fell. So when you get consistent decline in the unemployment rate and three out of the last five months job growth topped 200,000, I think you’re self-sustaining, reinforcing the positive with this number and the revisions.”
Another positive: average hourly earnings were up last month. Which means more spending power for the mighty U.S. consumer. But that pay raise leaves out the 19.3 million Americans who are still out of work or underemployed.
The numbers, although they still have some analysts on edge, are, in the eyes of many, the most positive we’ve received from the Labor Department in a long time.