U.S. jobless rate plunges, but Nevada slow to recover
A national jobs report that sent stock markets soaring Friday drew more muted responses in Las Vegas.
In a surge of hiring, companies added 243,000 jobs nationwide in January — across the economy, up and down the pay scale and far more than just about anyone expected. U.S. unemployment fell to 8.3 percent, the lowest in three years.
State and local job reports for January won’t come out until March 12. But December’s regional jobless figures showed unemployment languishing well above the national rate, at
12.6 percent statewide and 12.7 percent in Las Vegas. Nevada has led the nation in joblessness since May 2010.
That unemployment gulf is partly why local observers greeted Friday’s report with little enthusiasm.
“The dynamics remain somewhat fragile considering the levels from where we’re coming. We’re certainly not out of the woods yet,” said Brian Gordon, a principal in local research and consulting firm Applied Analysis. “The latest data do suggest that we continue to experience modest overall improvements, but they don’t necessarily suggest that we’ll see any material change in the local employment picture in the near term.”
Steve Brown, director of the Center for Business and Economic Research at the University of Nevada, Las Vegas, said it’s tough to know just what the new numbers mean for local joblessness in January.
“It’s still only 243,000 jobs spread out over the whole country,” he said.
That job growth was the fastest since March and April. Before that, the last month with stronger hiring, excluding months skewed by temporary census jobs, was March 2006.
The unemployment rate came down by two notches from December. It has fallen five months in a row, the first time that has happened since 1994, two economic booms and two recessions ago.
“The economy is growing stronger,” President Barack Obama said. “The recovery is speeding up.”
The report Friday from the Labor Department seemed to reinforce that the nation is entering a virtuous cycle, a reinforcing loop in which stronger hiring leads to more consumer spending, which leads to even more hiring and spending.
That could boost Southern Nevada’s jobs market.
“More people working means more people having the income to spend on vacations, and having the whole U.S. economy moving means higher incomes throughout the nation,” Brown said. “(Improving jobs numbers) will also boost consumer confidence, which will encourage people to go on vacation.”
It could be a while before that effect trickles down to local unemployment figures, though. Employment struggles in construction and government continue to offset solid hiring in sectors such as leisure and hospitality and professional and business services. Gordon said he expects the city’s jobless rate to remain in a relatively tight range in coming months near its current level, as employers create new jobs and workers either enter or leave the workforce.
But sustained modest improvements in the short term can build into more “meaningful and substantial” results near 2012’s end, Gordon added.
And Brown said he is inclined, based on the latest numbers, to say 2012 could be better than he initially expected for Southern Nevada’s jobs market.
POSITIVE SIGNS FOR LAS VEGAS
U.S. gross domestic product grew at nearly 3 percent in the fourth quarter. While Brown and other economists said they were pessimistic the economy would continue to expand at that rate in early 2012, the unemployment findings have provided grounds for more optimism.
“It looks like that (fourth-quarter) growth could be sustained,” Brown said.
“If we take the approach that a rising tide lifts all boats, I think there’s an expectation that we should get some of that (improvement),” he added. “What we saw in 2011 was that most of the West, except Nevada, was seeing growth similar to the nation. I think 2012 is a year in which we’ll see more improvement in Nevada, and in Las Vegas. There are enough positive signs in the local economy that I think we’ve turned the corner.”
On Wall Street, where investors had already driven stocks to their best start in 15 years because of optimism about the economy, the jobs report triggered a spasm of buying. The Dow Jones industrial average climbed 156 points, its second-best showing this year, and finished the day at 12,862, its highest close since May 2008, four months before the financial crisis struck.
The Nasdaq composite index finished at its highest since December 2000, during a steep decline after the dot-com stock craze. Money poured out of bonds, which are considered less risky than stocks, and bond yields rose.
“Virtually every economist on the planet had expected a drop in the rate of job gains in January, which makes today’s upward surprise even more surprising,” Dan Greenhaus, chief global strategist at the brokerage BTIG, said in a note to clients. In December, 203,000 jobs were created.
The jobs report immediately reverberated through the presidential campaign. The drop in the unemployment rate put it exactly where it was in February 2009, the month after Obama took office.
In Arlington, Va., the president argued that it was no time to let a 2-percentage-point cut in the Social Security payroll tax expire, as it will if Congress doesn’t take action by the end of the month. The tax cut reaches 160 million Americans.
Of the economic recovery, he said: “We’ve got to do everything in our power to keep it going. We can’t go back to the policies that led to the recession, and we can’t let Washington stand in the way of the recovery.”
His Republican foes used the numbers to argue that the pace of improvement was not good enough. “We can do better,” said former Massachusetts Gov. Mitt Romney, the Republican front-runner. “These numbers cannot hide the fact that President Obama’s policies have prevented a true economic recovery.”
Unemployment was 6.8 percent when Obama was elected, 7.8 percent when he was sworn in and 10 percent, its recent peak, nine months later. No president since World War II has won re-election with unemployment higher than
7.2 percent.
MANY INDUSTRIES, FIELDS HIRING
The job gains in January were widespread:
■ The professional services category, which includes high-paying jobs like architects, accountants and engineers, added 70,000 jobs, the most in 10 months. The category also includes temporary workers.
■ Manufacturing added 50,000 jobs, the most in a year, and the beleaguered construction industry added 21,000, its second straight month of strong gains. Construction added 31,000 jobs in December. Both months were probably helped by the warm winter.
■ The leisure and hospitality industry, which includes restaurants and hotels, added 44,000 jobs. Retailers added nearly 11,000. Governments cut 14,000 jobs, which means the private sector added 257,000.
The 243,000 jobs added far exceeded the estimate by economists of 155,000, according to FactSet, a provider of financial data. Other economist estimates were even lower.
Government revisions to previous months’ totals were another encouraging sign. Hiring was stronger in November and December by 60,000 jobs than first estimated. November was revised up from 100,000 to 157,000 and December from 200,000 to 203,000.
The government also issued its annual revisions to jobs data going back five years. They showed that hiring was stronger over the past two years than previously thought. The economy added about 1.82 million jobs last year, compared with an original estimate of 1.64 million.
The government uses a survey of mostly large companies and government agencies to determine how many jobs were added or lost each month.
It uses a separate survey of households to determine the unemployment rate. The household survey had more good news: 631,000 people said they found work in January. That pushed the unemployment rate down to 8.3 percent and the number of unemployed down to 12.8 million, the fewest in three years.
And 250,000 people streamed back into the workforce, looking for jobs. Because people are counted as unemployed only if they do not have jobs and are looking for work, that makes the drop in the jobless rate all the more impressive.
The job market is a long way from full health. The nation has about 5.6 million fewer jobs than it did when the Great Recession began in December 2007.
Employers have added an average of 201,000 jobs a month the past three months. That’s 50,000 more than the economy averaged a month last year.
Still, 11 million people either have stopped looking for jobs or are working part-time and would rather work full-time. When those people are added to the 12.8 million unemployed, nearly 24 million are considered underemployed. The underemployment rate edged down in January to 15.1 percent, from 15.2 percent.
The Associated Press contributed to this report.
