Economy Watch: January Jobs Jump Broad-Based

January's employment totals were even better than expected, adding 243,000 jobs. Greece's government has finalized an austerity deal for the economically challenged nation. And the ISM's non-manufacturing index rose 3.8 points last month.

February 6, 2012
By Dees Stribling, Contributing Editor

Image courtesy Flickr user j burkhalter

The U.S. economy not only added 243,000 jobs in January, which was a surprise to the dismal scientists expecting something more even more dismal, but the growth turned out to be broad-based, which was something of a surprise as well. Professional and business services added 70,000 jobs during the first month of the year, while employment in leisure and hospitality increased by 44,000, and the (almost) always-growing healthcare sector added 31,000 jobs. Manufacturers added 50,000 jobs and retailers added 19,000.

It’s also worth noting that the Bureau of Labor Statistics revised November and December 2011 employment totals upward: November from an anemic 100,000 to a somewhat healthy 157,000, and December up a little from 200,000 to 203,000. All of these additions to the jobs total in January were in the private sector. Government employment, which has been on a persistent downward trajectory recently–down 276,000 jobs in the last 12 months–didn’t budge much one way or the other in January 2012.

Of course, January marks only the second reasonably strong employment month in row. A good many more months like this are still necessary to add up to a jobs recovery. Also, the BLS reported that the number of people employed part time for economic reasons — that is, those who want a full-time job but who can’t find one — is 8.2 million, changed little in January. Moreover, the number of long-term unemployed (those without work for 27 weeks or more, or the hard-core unemployed) was little changed at 5.5 million and accounted for 42.9 percent of the total unemployed.

Greece Government, Opposition Agree to More Austerity

For weeks now, Greece has been playing Default or No Default, perhaps with the fate of the improving U.S. economy in the balance. On Sunday evening, word broke that Greek Prime Minister Lucas Papademos had persuaded the leaders of the nation’s other major political parties to go along with the demands of creditors (the “troika” of creditors) and other euro-zone nations to cut public spending in the beleaguered Hellenic Republic by 1.5 percent of Greek GDP. More austerity, in other words.

But it isn’t quite a done deal. Details of the agreement between the government and the three opposition leaders remain to be worked out, and all the political parties in Greece are nervous about the upcoming April elections. Still, news that the Greek parties had agreed on new austerity removed a major stumbling block to the 130 billion euro ($171 billion) payment of the next round of the EU-IMF bailout of the Greece, so maybe for now a euro-zone blowup can be averted (but there still Spain, Portugal and the big-kahuna economy of Italy with blowup potential remaining).

ISM Non-Manufacturing Index Up

The Institute for Supply Management’s Non-Manufacturing Index saw a rise in January, up 3.8 points to 56.8 month-over-month, according to the organization on Friday. The reading represents the 25th month in a row that the U.S. non-manufacturing sector expanded, with readings above 50 meaning expansion. January’s reading was also stronger expansion than during most of 2011, when the index hovered in the low 50s.

Almost all of the components of the index were up, including business activity, new orders, inventories, prices and more. Employment especially was on an upward trajectory, rising from 49.8 in December — a reading that pointed a little toward contraction — to 57.4 in January, which is well within the realm of expansion. The only components of the index down in January were supplier deliveries and inventory sentiment (which gauges whether businesses believe their inventories are too high, too low, or just right).

Wall Street took the positive employment numbers to heart on Friday by spiking upward. The Dow Jones Industrial Average gained 156.82 points, or 1.23 percent, while the S&P 500 was up 1.46 percent and the Nasdaq advanced 1.61 percent.