US jobs, factory data point to steady economic growth

Feb 02 2013, 12:21 IST
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U.S. employment grew modestly in January and job gains in the previous two months were larger.  (Reuters) U.S. employment grew modestly in January and job gains in the previous two months were larger. (Reuters)
SummaryReports on Friday showed factory activity hit a nine-month high in January as new orders rebounded.

U.S. employment grew modestly in January and job gains in the previous two months were larger than first reported, a counter punch to recent data that suggested a tepid economic recovery had stalled at the end of last year.

Adding to that optimism, separate reports on Friday showed factory activity hit a nine-month high in January as new orders rebounded, while car and truck sales surged and consumer confidence perked.

The reports, which helped propel U.S. stock markets to their highest levels in more than five years, contrasted markedly with a government report earlier in the week that said the economy shrank unexpectedly in the final months of 2012, albeit for what most economists consider fleeting reasons.

"It is clear that the economy has a forward momentum. Most pistons in the economic engine are firing, pointing to sustained economic growth," said Sung Won Sohn, an economics professor at California State University Channel Islands.

Employers added 157,000 jobs last month and 127,000 more jobs were created in November and December than previously reported, the Labor Department said. Revisions performed each January to the prior year's data showed the labor market was healthier in 2012 than initially thought.

While the unemployment rate rose 0.1 percentage point to 7.9 percent, the closely watched report showed an increase in hourly earnings and solid gains in construction and retail employment.

Separately, the Institute for Supply Management said its index of national factory activity rose to 53.1 last month, the highest level since April, from 50.2 in December. A reading over 50 suggests expansion in the manufacturing sector.

Activity was boosted by a bounce back in orders and inventories, as well as gains in employment. That offered hope manufacturing will continue to support the economy.

The fairly upbeat reports sparked a rally on Wall Street, with the Dow Jones industrial average touching its highest level since mid-October 2007 and the Standard & Poor's index rising to a five-year high.

The dollar rallied against the Japanese yen, while U.S. Treasury debt prices fell marginally.

OUTPUT CONTRACTION SEEN AS A FLUKE

A third report on Friday showed consumer sentiment on the rise even as households faced up to smaller paychecks as some federal taxes rose on Jan. 1.

The economic growth picture was also brightened by reports showing several automakers, including General Motors Co and Ford Motor Co scored better-than-expected sales

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