Jobless Rate Falls to 8.3 Percent

But don't call the recovery solid just yet.

By SHARE

The United States added 243,000 jobs in January, bringing the unemployment rate to 8.3 percent, down two-tenths of a percentage point from December's unemployment rate of 8.5 percent.

The figure reflects a definite acceleration to U.S. job growth. In 2011, payrolls grew by a monthly average of just over 150,000. January's figure represents the second straight month of growth over 200,000. January's jobs number shows growth across a variety of industries. The number also represents a pleasant surprise: consensus estimates had been around 125,000, according to Dow Jones Newswires. Healthcare once again boosted growth in January, with nearly 30,000 new jobs, and the leisure and hospitality industry also added 44,000. Government, meanwhile, continued to shed jobs, this time by 14,000.

[See why the Fed is lukewarm on the recovery.]

The last time the employment numbers were as good was at the beginning of the Obama administration in 2009. The report is likely to be saluted by Obama, as jobs and the economy are the key issues on which Republican presidential candidates have been hammering the incumbent president.

Two particularly bright spots in January were manufacturing and construction, industries that have been on bumpy roads to recovery.

"In general [job growth] was pretty broad-based, with very strong growth in manufacturing and construction. I guess those industries, especially construction, are starting to turn around. Manufacturing has been strong for a while and getting stronger," says Gad Levanon, director of Macroeconomic Research for the Conference Board.

Construction posted its second straight sizable jump last month. After increasing by 31,000 jobs in December, that industry in January added 21,000. The figures are small but excellent news for an industry that has struggled since the housing bust.

Likewise, manufacturing added 50,000 jobs in January. That industry has been enjoying a renaissance after decades of decline, having added more than 400,000 jobs since bottoming out in early 2010.

Buried in the report are other promising numbers. The U-6 unemployment rate, which includes people marginally attached to the labor force like discouraged workers and those employed part-time for economic reasons, continued its downward trend, dropping by one tenth of a pecentage point to 15.1 percent. That is a decline of 1.3 percentage points since September. Weekly earnings were also up, and are now nearly $20 higher than in January 2011, at $803.51.

The job growth was also particularly strong in two minority groups: the African-American unemployment rate fell from 15.8 percent to 13.6 percent, and the rate for Hispanics fell by 0.5 percentage points.

Still, Levanon cautions that it is not yet time to celebrate a sustainable, resilient recovery.

"240,000 is above the trend, so I think we are experiencing a especially strong period, but I don't think it's going to last at those levels," he says. He points to the months of February, March, and April in 2011, when the economy averaged more than 200,000 jobs per month, only to taper off again and dip below 100,000 in the late spring and summer.

[See the potential consequences of the Buffett Rule.]

"I don't think we expect very strong economic growth in the first half of 2012, probably in the range of 1.5 percent, so that's not strong enough to sustain such strong job growth," says Levanon.

Whether unemployment continues its slow descent depends on more than simple supply and demand. One is the Eurozone debt crisis, which could potentially create a global recession.

What Congress does—or doesn't do—is also of key importance. A CBO report released this week showed that, if Congress takes no action and allows a number of tax cuts and key provisions to expire, unemployment could rise to 9.2 percent in 2013. Conversely, passage of the payroll tax cut and renewing unemployment insurance could pull unemployment down by a few tenths of a percentage point. But such policies come with a tradeoff—as the report noted, spending more federal dollars now on stimulative efforts could push unemployment upward in the long term.