Sun, Feb 05, 2012 - Page 11 News List

US unemployment rate hits a three-year low

Reuters, Washinton

The US created jobs at the fastest pace in nine months last month and the unemployment rate unexpectedly dropped to a near three-year low, giving a boost to US President Barack Obama.

Nonfarm payrolls jumped 243,000, the US Department of Labor said on Friday, as factory jobs grew by the most in a year. The jobless rate fell to 8.3 percent — the lowest since February 2009 — from 8.5 percent in December.

The gain in employment was the largest since April and it far outstripped the 150,000 predicted in a poll of economists. It hinted at underlying economic strength and lessened chances of further stimulus from the US Federal Reserve.

“More pistons in the economic engine have begun to fire, pointing to accelerating economic growth. One of the happiest persons reading this job report is President Obama,” said Sung Won Sohn, an economics professor at California State University Channel Islands.

The payroll gains were widespread — from retail to temporary help and from construction to manufacturing — an indication the recovery was becoming more durable.

A survey of households showed the unemployment rate declined even as new job seekers flooded into the labor force. Economists had expected the jobless rate, which has now fallen 0.8 percentage point since August, to hold steady.

“I think this is a sign that maybe the economy is reaching that holy grail of a self-sustaining economic expansion,” said Stuart Hoffman, chief economist at PNC Financial Services in Pittsburgh.

The outlook was further brightened by a separate report showing service sector activity quickened last month to a near one-year high. A gauge of service sector employment touched a six-year high.

Obama welcomed the strong jobs report and urged Congress to extend a payroll tax cut and benefits for long-term unemployed, which expire at the end of this month.

“Now is not the time for self-inflicted wounds to our economy. I want to send a clear message for Congress. Do not slow down the recovery that we are on, don’t muck it up,” he said at a firehouse in Arlington, Virginia.

Republicans acknowledged the improvement in the labor market, but said the jobless rate was still too high.

“Our economy still isn’t creating jobs the way it should be and that’s why we need a new approach,” House Speaker John Boehner said.

While employment growth has quickened, there are no jobs for three out of every four unemployed people and 23.8 million Americans are either out of work or underemployed. The level of employment is still 5.57 million from its pre--recession level.

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