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Economy Adds 257,000 New Jobs; Unemployment Rate Up Slightly

A construction worker looks down on the site of the Manhattan West project last month in New York. Construction was among the hardest-hit sectors during the worst recession in modern memory.
Mark Lennihan
A construction worker looks down on the site of the Manhattan West project last month in New York. Construction was among the hardest-hit sectors during the worst recession in modern memory.

Updated at 9:50 a.m. ET

Some 257,000 jobs were added to the U.S. economy in January, continuing a 12-month span of growth that saw at least 200,000 jobs added each month, according to the Department of Labor. Even so, in a separate survey released by the department's Bureau of Labor Statistics, the benchmark unemployment rate ticked up slightly to 5.7 percent.

The data exceeded the consensus forecast of economists, who looked for a slight slowing of growth from December. They forecast 230,000 new nonfarm payroll jobs and an unemployment rate holding steady.

The healthy gains were in sharp contrast to six years ago, in January 2009, when the economy shed nearly 800,000 jobs in the depths of the Great Recession. In the first quarter of 2009, a whopping 2.3 million jobs were lost.

As we reported at the time, last month's unemployment rate had dipped from 5.8 percent to 5.6 percent, while the economy added 252,000 jobs in December, according to initial reports.

January's slight rise in the unemployment rate from its 5.6 percent figure last month is explained by a 703,000 increase in the civilian labor force — amounting to a 0.2 percentage point rise in the labor force participation rate, says Sophia Koropeckyj, a senior economist and managing director at Moody's Analytics.

"The slight increase in the unemployment rate was the result of strong labor force growth, reflecting more confidence in the economy, as indicated in recent consumer confidence surveys," Koropeckyj writes. "The declines in such industries as temp workers and couriers and messengers reflect strong than usual seasonal hiring and now the post-holiday adjustment."

The month's data were also accompanied by a significant positive revision in the the November and December data. The revision pegs November's job gains at 423,000, up from the 353,000 initially reported. Likewise, the December number was revised upward to 329,000 new jobs.

The Bureau of Labor Statistics says the biggest job gains occurred in construction (up 39,000), health care (38,000) and financial activities (26,000). The manufacturing sector added 22,000 jobs.

CNBC reports that it is only the second time in the last 11 years that January's numbers beat Wall Street expectations.

The Wall Street Journal reports:

"The report suggested employers maintained enough confidence to keep expanding in 2015 following the best year of job growth during the current expansion.

"The rise in workers' earnings offered a sign that slack in the labor market is diminishing. Average hourly earnings among private-sector workers rose 12 cents to $24.75 and were up 2.2% from a year earlier."

However, some offered a note of caution on the good news. Jim O'Sullivan, chief U.S. economist at High Frequency Economics, said in a note to clients early Friday to "be wary of January payroll data."

According to The New York Times, O'Sullivan wrote, "While the data are noisy in general, limiting the information value of a single reading, the seasonal adjustment process is especially challenging in January."

Even so, the unemployment rate remains stubbornly high for some groups of individuals: For instance, for teenagers it is 18.8 percent.

The rate for adult women was slightly better than for adult men (5.1 percent and 5.3 percent, respectively). The rate for whites was 4.9 percent and 4.0 percent for Asians. The rate for blacks was 10.3 percent and 6.7 percent for Hispanics.

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Scott Neuman is a reporter and editor, working mainly on breaking news for NPR's digital and radio platforms.