US economy adds 111,000 non-farm jobs in January

WASHINGTON - The US economy added a weaker-than-expected 111,000 jobs in January, but the job picture was much brighter than first estimated in the final quarter of last year, a government report on Friday showed.

By (Reuters)

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Published: Fri 2 Feb 2007, 9:12 PM

Last updated: Sat 4 Apr 2015, 9:46 PM

Most of last month’s hiring was in the service sector, which added 104,000 jobs, while the manufacturing sector posted its seventh straight monthly loss, the Labour Department said.

Unseasonably warmer weather during January likely led to the 22,000 job gain in the construction sector.

“The number in January looks like the economy is beginning to behave the way that people expected it to, it is beginning to decelerate,” said Mark Vitner, Senior Economist at Wachovia Securities in Charlotte.

“This report makes it look like we are going to have six more months of soft landing,” Vitner added.

In early trading after the report, stock index futures rose while bond prices moved higher. The dollar initially lost ground against major currencies.

Wall Street analysts polled ahead of the report were expecting that the economy added 149,000 jobs outside the farming sector last month. At the same time, the unemployment rate inched up to 4.6 percent, the highest since a matching rate in September of last year.

The employment picture for the last three months of 2006 was indeed better than first thought. Payrolls for the final three months of last year were revised up by a total of 104,000 jobs.

“I think what we’re seeing is confirmation that the economy in the fourth quarter was very strong, we do know that it’s slowing a bit in the first quarter, but not enough to cause concern,” said Marc Pado, US Market Strategist at Cantor Fitzgerald in San Francisco.

On the wage front, average earnings per hour rose by 0.2 percent to $17.09. That was was less than the 0.4 percent rise a month earlier and the 0.3 percent increase Wall Street analysts were expecting.

Still, hourly earnings were up 4.0 percent from the same time a year ago and Federal Reserve officials are closely watching wage increases as they remain wary of inflation pressures.

“There’s no threat of a rate hike out of this number, but no likelihood of a rate cut either,” said Pado.

The monthly jobs report also contained an annual revision, in which the Labour Department recalculated its job count for the 12 months through March 2006 based on state unemployment insurance records.

The department said it had undercounted employment growth during that period by a hefty 752,000 jobs, or 0.6 percent.

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