January jobs report: The long slog continues

(MoneyWatch) The Labor Department said 157,000 jobs were created in January and the unemployment rate edged up to 7.9 percent from 7.8 percent. There were positive revisions to November and December, which amounted to an extra 127,000 jobs. Those revisions are consistent with recent data that showed firming throughout the month: Weekly claims dropped to the lowest level since 2008; manufacturing reports have been improving; and the National Federation of Independent Business showed small business hiring edged up.

The Labor Department also released its annual benchmark revisions: From April 2011 to March 2012, the economy added about 422,000 more jobs than previously reported and for 2012, the economy added an average of 181,000 jobs a month, an improvement from the 153,000 pace originally reported. Additionally, there was real progress in the average duration of unemployment, which dropped to 35.3 weeks, the lowest level since January 2011.

But there is still a long way to go after the deepest recession since the Great Depression: 8 million jobs were lost in 2008 and 2009, before the recovery created 5 million over the last three years. Additionally, 12.3 million Americans out of work and of those, 38 percent have been without work for over six months.

Businesses complain that it's tough to make hiring decisions when the economy is only growing by 2 to 2.5 percent annually. 80 percent of small owners surveyed said they made no changes in their employment levels in recent months, due to caution about the economy. Whether that caution can be attributed to political uncertainty surrounding the fiscal cliff, the debt ceiling and other Washington battles, is tough to know. What is certain is that as the nation prepares for $110 billion worth of across the board spending cuts in March ("sequestration"), there is little expectation for a growth surge that would help create jobs.

Many have brushed aside the lousy fourth quarter GDP (the economy shrank by 0.1 percent) report as a one-off event, driven lower by a drop in defense spending and inventories. At the Fed's policy meeting this week, the central bankers noted the recent "pause" in economic activity is temporary. It could be that Q3 and Q4 were both anomalies. When averaged, the numbers are fairly consistent with the first half of the year. What's more important is that even if the preliminary fourth quarter GDP is revised higher from the initial reading of -0.1 percent annualized growth, 2013 is unlikely to produce the number of jobs needed to move the needle on the unemployment rate.

Maybe we should be thankful that the numbers are slowly improving. But with so many still out of work, it's hard to get out the pom-poms. Without a real jobs initiative (it's hard to count the president's recently-disbanded jobs council as a significant effort), it's hard to see how the jobs situation will dramatically improve any time soon. As a result, the long slog continues.

January jobs report

-- Jobs created: +157K (Revisions from Nov and Dec: +127K)

-- Private jobs created: +166K

-- Government jobs lost: -9K

-- Unemployment rate: 7.9 percent (from 7.8 percent; rate has been 7.7 - 7.9 percent since September, 2012)

-- Broad unemployment rate: 14.4 percent (includes the official rate plus "marginally attached workers," those who are neither working nor looking for work, but say they want a job and have looked for work recently; and people who are employed part-time for economic reasons, meaning they want full-time work but took a part-time schedule instead because that's all they could find)

-- Total unemployed: 12.3 million

-- Long-term unemployed: 4.7 million, representing 38.1 percent of the total unemployed

-- Average duration of unemployment: 35.3 weeks, lowest since January 2011.

-- Participation rate: 63.6 (below the 66 to 67 percent rate that was normal over the last 20 years; 2/3 of recent decline is due to demographics)

-- Average work week: 34.4 hours

-- Hourly earnings: $23.78 (Over the past 12 months, up 2.1 percent)

-- Retail: +33K

-- Construction: +28K (since Jan 2011 lows, up 296K; still 2 million fewer jobs from April 2006 peak)

-- Health services: +23K

-- Manufacturing: unchanged

Editor's note: CBS MoneyWatch initially published an Associated Press story on the unemployment report, which we have since replaced with this staff-written article. You can find the initial AP report and reader comments here.

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    Jill Schlesinger, CFP®, is the Editor-at-Large for CBS MoneyWatch. She covers the economy, markets, investing or anything else with a dollar sign. Prior to the launch of MoneyWatch in 2009, Jill was the chief investment officer for an independent investment advisory firm. In her infancy, she was an options trader on the Commodities Exchange of New York.

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