Economy added 157,000 jobs in January; unemployment rate up to 7.9%

WASHINGTON -- The U.S. economy added 157,000 new jobs in January and the unemployment rate ticked up to 7.9%, the Labor Department said Friday.

The job creation was below analyst expectations of 165,000 and down from a revised 195,000 in December. The unemployment rate ticked up from 7.8% in December.

The pace of job creation is consistent with moderate growth and could ease concerns that the economy’s unexpected contraction in the final three months of last year was a sign another recession could be near.

In fact, the Bureau of Labor Statistics on Friday revised job gains for October, November and December sharply upward. The total for those three months was 603,000, compared to an initial 453,000.

“With a gain of 157,000 jobs in January, the employment situation continues to improve despite slow economic growth,” said Kathy Bostjancic, director of macroeconomic analysis at the Conference Board.

“The good news is that January’s employment gains, coupled with large revisions to the prior months, may translate into more consumer spending power, which helps offset some of the negative drag on after-tax income from the expiration of the temporary payroll tax cut,” she said. “The bad news is that unemployment remains stubbornly high.”

The private sector added 166,000 jobs in January, but overall growth was pulled down by a net loss of 9,000 government jobs, the Bureau of Labor Statistics said.

Sectors that showed job gains in January included retail, construction and healthcare, while transportation and warehousing showed declines.

The jobs report comes after the government said Wednesday that the economy shrank at a 0.1% annual rate in the fourth quarter of 2012, the first contraction since the Great Recession ended in 2009.

But economists said the slowdown at the end of last year was an anomaly and predicted the economy is continuing to grow at a slow to moderate pace.

[For the record, 2:48 p.m. Feb. 1: A previous version of this post said the private sector added 167,000 jobs in January. It added 166,000.]

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