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US Jobless Rate Falls to Lowest Level for Three Years
By Richard Blackden, Feb 3, 2012
America's unemployment rate tumbled to the lowest level in three years in January, raising hopes that the world's biggest economy may at last be gaining the momentum that has eluded it since the financial crisis.
The widely watched monthly jobs report showed that 243,000 Americans found work in January, helping to drive the unemployment rate down to 8.3pc from 8.5pc in December. As recently as August it had stood at 9.1pc.
The figures sparked a rally on Wall Street and in the City of London, where the FTSE 100 hit a seven-month high, closing up 1.8pc at 5901.91 on Friday.
January's numbers comfortably eclipsed all expectations, and there was further encouragement to be had from the broad sweep of industries that took on employees during the month.
Manufacturing added 50,000 workers, while leisure and hospitality sectors hired 44,000 staff.
Finance and banking was a rare weak spot, with Wall Street contributing to a loss of 5,000 jobs for the industry.
"It was a pretty good report. It's not one you can tear apart," said Michael Hanson, an economist at Bank of America Merrill Lynch in New York. "The biggest question is whether this is the start of a big upswing."
There were other nuggets of good news in the report from the Labor Department that were latched on to by cheerleaders for America's recovery. Revisions to the data for both November and December added another 60,000 jobs.
However, last year's disappointing US growth of just 1.7pc has now left the majority of economists – including those at the Federal Reserve – reluctant to declare that the recent run of better data is the start of the self-sustaining pattern that has characterised previous recoveries.
And, there was, inevitably, plenty in the report that offered support for those taking a more cautious stance. The Bureau of Labor Statistics had its annual revision of the total size of the potential working population, which helped flatter Friday's numbers.
Another less encouraging indicator was that average hourly earnings edged up only 0.2pc on the month, a pace that economists say is not strong enough to do much for consumer spending.
But given the current struggle of the UK and most European economies, the jobs report was enough to offer hope that the US may be able to help drive a broader global rebound this year.