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The economy created jobs at the fastest pace in nine months in January and the unemployment rate dropped to a near three-year low of 8.3 percent, indicating last quarter’s growth carried into early 2012.
Nonfarm payrolls jumped 243,000, the Labor Department said on Friday, the most since April and beating economists’ expectations for a gain of only 150,000.
Economists had expected the jobless rate to hold steady at 8.5 percent. The rate has dropped 0.8 percentage point since August.
The decline last month reflected large gains in employment in the separate household survey from which the unemployment rate is derived. Fewer people left the labor force.
Job gains last month were widespread, with even the transportation and warehousing sector increasing payrolls.
The tenor of the report was further strengthened by revisions to November and December payrolls data, which showed 60,000 more jobs created than previously reported.
In addition, average hourly earnings rose four cents, which should help to support spending. The report suggested that expectations of a slowdown in U.S. economic growth in the first quarter were not yet impacting on companies’ hiring decisions.
The continued labor market improvement could be a relief for President Barack Obama who faces a tough re-election.
The U.S. Federal Reserve last week said it would probably hold interest rates near zero at least through 2014, citing still-high unemployment.
Chairman Ben Bernanke said the Fed was mulling further purchases to speed up the recovery, but the last employment numbers could cause policymakers to step back. The U.S. central bank has already bought $2.3 trillion in bonds to keep rates low and spur the economy.
JOBS DEFICIT HUGE
Employment in the private sector surged 257,000 – the largest gain since April. Government payrolls fell 14,000, the least amount since September.
The U.S. economy grew at a 2.8 percent annual rate in the final three months of 2011, quickening from 1.8 percent in the third quarter. However, the rebuilding of stocks by businesses accounted for two-thirds of the rise, setting the economy up for a slower growth pace this quarter.
Growth is also seen moderating as the European debt crisis, which has already pushed some economies in the region into recession, takes an edge off U.S. exports.
Still, there are signs that the economy continues to have momentum. Auto sales were buoyant in January, factory activity hit a seven-month high and the four-week average of new jobless claims fall through the month.
While job growth has quickened there are no jobs for three out of every four unemployed people and 19.3 million Americans are either out of work or underemployed.