Jobless Rate Maintains New Lows

The U.S. economy created 245,000 jobs in January, the Labor Department said Friday, a sign that the long-awaited slowdown will have to wait a little longer.

The job growth was about 100,000 more than the 150,000 expected by economists surveyed by CBS.MarketWatch.com, but the high figure was moderated somewhat by the sharp downward revision to December's payrolls gain to 298,000 from 378,000.

The two months' average is 271,000, compared with the 264,000 expected.

The unemployment rate remained at 4.3 percent, tying a 28-year low.

In one worrisome note, average hourly earnings rose 0.5 percent to $13.04, the biggest gain since August. Economists were expecting a 0.3 percent gain. The year-over-year trend rose to 4 percent from 3.8 percent.

The Federal Reserve is closely watching for signs that the tight labor markets are beginning to drive wages (and ultimately prices) higher.

The strong job growth and the spike in earnings will lead to speculation that the next move by the Fed will be to raise rates and that it could come sooner rather than later. However, the Federal Open Market Committee said in its latest minutes that the low inflationary environment is giving it the freedom to wait a little longer before tightening.

"While robust productivity gains have absorbed any inflationary impact from rising wages, investors are concerned that the persistent economic strength will eventually spill into higher consumer prices," said Sherry Cooper, chief economist at Nesbitt Burns.

The bond market sold off on the news. The price of a 30-year Treasury bond fell 24/32, pushing the yield to 5.346 percent.

The jobs story in January was a continuation of several trends: Manufacturing lost 13,000 jobs, bring the total lost since March to 285,000. But it was the smallest loss since the 1,000 lost in September.

Services added 252,000 jobs, with gains across most industries, especially retail, wholesale, local government, engineering and computer services. Construction added 15,000 jobs, somewhat of a surprise considering the storms that hit in January.

The average workweek fell by 6 minutes to 34.5 hours (as expected). The manufacturing workweek fell 12 minutes to 41.5 hours and overtime was unchanged at 4.5 hours.

Written By Rex Nutting, CBS MarketWatch