Factory, Housing Gains Bode Well For Hiring In 2013
Construction and manufacturing gathered momentum in recent months and look to step up hiring this year, several economic reports out Friday indicated.
Nonfarm payrolls expanded by 157,000 in January, below forecasts of 185,000. The jobless rate ticked up to 7.9% as more people entered the labor force. A broader measure that includes underemployment was steady at 14.4%.
But the Labor Department also revised earlier data significantly higher. Employers added 335,000 more workers last year than originally estimated, and the average over the past three months is now 200,000.
The stock market rallied sharply, also helped by manufacturing data that beat forecasts.
"You feel that the momentum has turned," said Steve Blitz, chief economist at ITG Investment Research.
Growth is not robust yet, but the incremental improvements over time in jobs, incomes and housing are having a cumulative effect and spilling over, he said.
Construction hiring remained solid with 28,000 workers in January. The three-month total is the best since the housing boom.
A separate report showed December construction outlays rose 0.9% vs. November. The 22.3% annual gain in residential investment is the best since mid-2004.
Manufacturers added 4,000 jobs in January, though their payrolls are actually 7,000 lower than six months earlier. But the Institute for Supply Management's manufacturing activity index climbed 2.9 points in January to a nine-month high of 53.1.
ISM saw faster factory job and output growth. The new orders gauge swung to expansion, with its best monthly gain in two years.
Auto sales have propped up manufacturing during its recent soft patch. Ford's (NYSE:F) U.S. sales last month leapt 22% vs. a year ago. GM (GM) and Chrysler sales were up 16%. Toyota's (TM) jumped 27%.
Demand for new cars also has helped lift retail payrolls, which rose by 32,600 last month. In the last six months, retailers have hired nearly 203,000.
But that continues a trend of strong demand for labor in low-wage sectors. Leisure and hospitality payrolls rose by 23,000.
"It's not the kind of employment that will drive growth," Blitz said.
And despite the job gains, total hours worked fell in the retail and leisure sectors. That comes as employers mull ways to avoid ObamaCare fines.
Manufacturing also could be slowed if steep, automatic federal budget cuts go into effect, said Gennadiy Goldberg, a U.S. strategist at TD Securities.
Construction hiring may cool a bit too, if more owners put their homes on the market.
"There is a risk the initial push to build new homes is more than what the market is ready to absorb," Goldberg said.
St. Louis Federal Reserve President James Bullard, viewed as a centrist, said Friday that continued labor market gains would put the Fed "in a position to slow down or stop" its bond buying.
