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Unemployment Rate Dips But ...

The U.S. labor market's recovery remains sluggish.

America's employers added 146,000 jobs in January — a somewhat lackluster performance. Adding to the disappointment was a downward revision in the number of jobs created in December from 157,000 to 133,000. And the hard-hit manufacturing sector is again on a losing streak.

Most economists had expected the economy to gain about 200,000 jobs in January.

The unemployment rate dropped to 5.2 percent in January from 5.4 percent in December as people left the job market for any number of reasons.

"There's still a level of frustration. The economy is producing a moderate amount of job growth, but not a satisfying amount of job growth. That means there is a limited number of new opportunities for workers," said economist Ken Mayland, president of ClearView Economics.

The new numbers did contain a bright spot for President Bush, however. The latest increase in jobs means that the president's first term in office will show a net gain in payroll jobs. That allows Mr. Bush to escape being what Democrats and other critics had projected as the first president since Herbert Hoover to have a net loss of jobs on his watch.

Speaking in Omaha, Neb., Friday to plug his Social Security plan, Mr. Bush said he was pleased with the new report.

"That's a good sign. More people are going to work around our country," he said. "But we shouldn't be content. I'm looking forward to working with the members of Congress to create the conditions for continued economic expansion."

Questions about the health of the nation's jobs market dogged Mr. Bush throughout his first term and were a hot-button issue in the presidential campaign. Ultimately, the jobs situation and the economy weren't enough of a concern to deny Bush a second term.

The Federal Reserve, encouraged by the economy's performance, boosted a key short-term interest rate Wednesday by one-quarter-percentage point to 2.50 percent, its sixth increase since June. The Fed also stuck with a measured approach to raising rates in the months ahead.

On the jobs front, Fed policy-makers said: "labor market conditions continue to improve gradually."

For all of 2004, the economy added 2.2 million jobs.

Last year, the economy clocked a 4.4 percent increase in growth, its best performance in five years. Looking ahead, analysts predict that the economy will expand by 3.5 percent or more in 2005. That would be sufficient to spur modest job growth in the months ahead, analysts say.

The administration is predicting the payrolls will grow by 2.1 million this year, a figure that private economists would be respectable.

In Friday's report, there were employment gains in January in a wide variety of service sectors, including retail. But these were partially offset by job losses at factories and in construction.

Manufacturers, which were hardest hit by the 2001 recession and have struggled the most to get back on firm footing, lost 25,000 jobs in January, after shedding 7,000 in December. It marked the fifth straight month that the factory sector lost jobs.

Construction companies cut 9,000 positions in January, probably related to wintry weather. That came after 14,000 positions were added in December.

The service sector, the engine of job creation, showed hiring gains in January. Retailers added around 19,000 jobs, an improvement from a loss of around 8,000 in December. Job gains also were reported for education and health services, in the financial sector and in transportation.

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