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US jobless rate falls to four-year low

US employers stepped up hiring last month, boosting payrolls by 193,000 and lowering the nation's unemployment rate to 4.7 percent, the lowest since July 2001.

The fresh snapshot of the jobs climate, released by the US Labor Department on Friday, suggested that the economy started the new year on fairly good footing.

Although the 193,000 gain in payroll jobs last month fell short of the 250,000 new jobs that economists said to anticipate before the release of the report, it still marked a sturdy showing and was the biggest increase in jobs since November.

"There's no question we're getting back to better days for job creation," said Ken Mayland, economist at ClearView Economics.

"There's been a sense of unease in the American workplace and this should help relieve that. The economy is getting on off to excellent start in 2006," he said.

Moreover, job growth in December turned out to be stronger than previously thought. Revised figures showed payrolls expanded by 140,000 -- an improvement over the 108,000 new jobs first estimated a month ago. Employment was revised up for some previous months as well.

The unemployment rate dropped to 4.7 percent last month, from 4.9 percent in December.

In another report, the US Commerce Department said that factory orders rose by 1.1 in December, a good sign that manufacturing was off to a strong start in the new year.

This improvement followed an even higher 3.3 percent gain in November and marked the third straight month where new bookings to factories went up. December's performance was in line with the 1 percent increase in factory orders that economists were forecasting before the release of the report.

For all of last year, factory orders rose 8.1 percent. That followed a gain of 9.7 percent in 2004.

Job gains were fairly broad based, with employment growing in construction, manufacturing, professional and business services and education and health care. Those employment gains blunted job losses in retailing and government.

For all of last year, the economy created nearly 2 million jobs -- close to the the number posted for 2004, according to annual revisions.

In New York, the Institute for Supply Management (ISM) said on Friday that the service sector grew again last month, but the pace of growth slowed while extending an expansion that has stretched for nearly three years. Its index of nonmanufacturing activity fell to 56.8 from a revised reading of 61.0 in December. The new figure was lower than the 60 reading forecast by analysts.

A reading of 50 and above points to a growing service sector, while a figure below that signals contraction. Last month marked the 34th consecutive month of growth for the service sector, ISM said.

Despite good news on some economic matters, Americans still feel anxious about the economy, polls indicate.

US President George W. Bush, coping with relatively low job-approval ratings, is seeking to ease those fears. In his State of the Union address as well as subsequent speeches Bush has been talking about ways to make the country more competitive and is pushing plans to deal with pocketbooks issues, such as high energy prices and rising health care costs.

Bush also is calling on Congress to make his tax cuts permanent. Democrats, however, contend the tax cuts mostly helped the wealthy and are a big reason why the government's balance sheets are bleeding red ink.

Employees' average hourly earnings climbed to US$16.41 last month, up 0.4 percent from December. That increase was slightly larger than the 0.3 percent rise that economists were expecting.

While wage growth is good for workers, a big pickup if sustained -- would be troubling to investors and economists who fret about inflation. To fend off inflation, the US Federal Reserve on Tuesday boosted a key interest rate to its highest point in nearly five years. New Federal Reserve Chairman Ben Bernanke will decide the next rate move at the Fed's next meeting, March 28. Many economists believe another rate increase is likely to come then.

Mayland said he believes the pickup in workers' wages should help support consumer spending, a key shaper of overall economic activity. Mayland predicts that the US economy, which grew by an anemic 1.1 percent rate in the final quarter of last year, is rebounding smartly in the January-to-March quarter.
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