Service Sector Keeps Churning Out the Jobs

Nonfarm payroll employment grew by 245,000 in January.
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Nonfarm payroll employment grew by 245,000 in January, significantly exceeding expectations, as the service sector continued to churn out jobs and manufacturing weakened a bit more than expected.

The consensus forecast called for an increase of 135,000 jobs, according to

Reuters

. In addition, December's jobs gain was revised downward to 298,000 from 378,000, according to the

Bureau of Labor Statistics

. The

household unemployment rate

was unchanged at 4.3%, a 28-year low.

While the 245,000-job increase bests most economists' predictions, the gains merely maintain last year's pace of employment growth, and in a similar fashion -- service-producing industries are strong, while the manufacturing sector remains weak. The 12-month moving average for gains in nonfarm payrolls is 226,000.

As expected, the construction sector, which benefited from unusually warm weather in December, turned downward in January. However, it still managed to gain 15,000 jobs, compared to a revised increase of 99,000 in December.

The manufacturing sector turned out a bit worse than expected. A total of 13,000 jobs were lost, whereas in December the sector lost 16,000 jobs. The last two weeks of strong economic data altered economists' view of the manufacturing arena, and the perception was that the manufacturing sector would come out flat, instead of losing jobs as it has for the last 10 months. That prediction turned out wrong, so even though productivity remains relatively sound, the employment situation hasn't turned around completely.

Not surprisingly, the service sector remained the strongest, showing a 252,000-job increase in nonfarm payrolls, compared to a revised 220,000-job increase in December.

The year-on-year rate of increase in

average hourly earnings

rose to 4% from a 3.8% rate in December. In January, average hourly earnings rose 6 cents, or 0.5%, to $13.04.

The final component of the report, the

average hourly workweek

, slipped to 34.5 from December's 34.6 hours per week.