U.S. jobless rate drops for fifth straight month

WASHINGTON – An unexpected burst of job growth last month helped drive down the unemployment rate to its lowest point in three years, raising hopes that the long-sluggish labor market is gaining momentum despite significant challenges to the economy.

The government reported that the nation’s unemployment rate fell to 8.3 percent in January, the fifth consecutive monthly decline, and that employers added 243,000 net new jobs last month – about 100,000 more than what analysts had forecast and the most in nine months.

Some economists cheered Friday’s report, calling it a strong signal of better times ahead for American workers.

Other analysts were more cautious, noting that job growth was inflated by the unseasonably warm weather – construction reported sizable gains, for instance – and that the outlook remains constrained by government cuts, financially strapped consumers and a slowing global economy.

“This is a great surprise,” said Heidi Shierholz, an economist at the Economic Policy Institute. “It was out of context with other things we’ve been seeing” in the economy, “so we can’t be confident that this is the new state of things.”

Federal Reserve Chairman Ben Bernanke had described the recovery as “frustratingly slow” in congressional testimony Thursday.

President Barack Obama took a careful line in his comments Friday.

“These numbers will go up and down in the coming months, and there’s still far too many Americans who need a job, or need a job that pays better than the one they have now,” he said during a speech in Virginia a few hours after the economic numbers were released. “But the economy is growing stronger. The recovery is speeding up.”

Nevertheless, stocks surged on the news, with the Dow Jones industrial average rising 156 points to 12,862, its highest since spring 2008.

The broad-based gains in new jobs reflected robust increases in manufacturing as well as solid additions in professional and business services, such as accounting and engineering, and in the leisure and health care industries.

The unemployment rate was down from 8.5 percent in December and 9.1 percent in August.

The news was welcomed by the Obama administration.

Labor Secretary Hilda Solis insisted that the improvement wasn’t a one-month aberration but a trend that had been building for some time. Like others in the administration, Solis used the occasion to make a case for extending the payroll tax cuts and emergency jobless benefits beyond their scheduled expiration at the end of this month.

There were 12.8 million unemployed workers in January, with 43 percent of them jobless for more than six months. That’s an unusually high percentage that raises serious questions about their employability because skills tend to erode over time.

Analysts said the economy needs to create at least 100,000 net new jobs a month just to keep pace with the growth in the workforce population. The nation lost, on average, about 360,000 jobs a month in 2008 and 2009.

Officially, the recession ended and the economy began recovering in June 2009, but it wasn’t until March 2010 that the nation began adding jobs. With January’s increase, U.S. payrolls stand at about 5.6 million below what they were at the start of 2008.

But job growth has been picking up slowly since last summer. And Friday’s report showed that there was stronger hiring at the end of last year than previously thought.

Officials said employers added 157,000 jobs in November, compared to the 100,000 initially estimated. Job growth in December was revised slightly higher to 203,000 and was more broad-based than was previously indicated.

The breadth of job gains was also encouraging. Manufacturing, a generally high-paying industry, added a hefty 50,000 jobs in January after increasing payrolls by 32,000 in the previous month. Car factories and makers of machinery, fabricated metals and wood products all bulked up.