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By John W. Schoen


The U.S. economy created a modest 157,000 jobs in January as the sluggish recovery from the recession of 2007 continued to leave millions of Americans job seekers sidelined and without a paycheck.

Despite the net gain in jobs for the month, the unemployment rate edged higher to 7.9 percent, consistent with a recovery that is just ambling along, at best.

The Labor Department's report Friday included a few positive signs, including a stronger pace of hiring at the end of 2012 than initially reported. That may dispel some worries that followed a separate report this week showing economic growth came to an abrupt halt as 2012 drew to a close.

On Wednesday, the government reported that the gross domestic product, the value of all goods and services produced by the nation, came to a standstill. Deep cuts in government spending and a big drawdown in inventories offset underlying strength in business and consumer spending.

“January's employment report should help to soothe any lingering concerns, after the negative GDP (data), that the U.S. economy is headed for a recession,” said Paul Ashworth, chief U.S. economist for Capital Economics.

Fresh data from other sources seemed to confirm that any pause in growth late last year was only temporary.

The U.S. manufacturing sector grew in January at its fastest clip in nine months, boosted by a surge in domestic demand, according to the Institute for Supply Management. Much of the strength is coming from automakers, who reported continued strong sales in January. An aging American fleet of cars and trucks, the result of businesses and households deferring replacement during the economic downturn, is prompting many buyers to visit car showrooms. Newer, fuel-efficient models have also spurred sales.

General Motors Friday said sales rose 16 percent in the latest month, while Ford posted a 22 percent sales gain. Chrysler reported a 16 percenty jump in January car sales, the company's best showing since 2008.

The auto industry is also benefiting from an overall improvement in consumers' mood after Washington reached a deal to avert the "fiscal cliff" at the beginning of the year, according to a survey released on Friday.

The Thomson Reuters/University of Michigan's index of consumer sentiment rose a point to 73.8, topping economists' forecasts of 71.5. (The survey was done before this week's report showing the economy contracted in the fourth quarter.)

There was even a bit of positive news in Friday's otherwise lackluster jobs report. The pace of hiring was a bit stronger over the past two years than initially reported. The Labor Department's annual statistical revisions showed that employers added an average of roughly 180,000 jobs per month in 2012 and 2011, up from previous estimates of about 150,000. And hiring was stronger at the end of last year, averaging 200,000 new jobs in the final three months.

But overall, the job numbers confirm what economists have been saying since the U.S. pulled out of one of the deepest recessions in a century: the pace of the recovery has been too slow to make much of a dent in the unemployment rate. Friday’s report showed the rate bumped up a tenth of a point – down from a peak of 10 percent in October 2009.

Since then, the pace of job creation has been barely fast enough to keep up with population growth. More than three years after the latest recession ended, overall employment is still 3.1 million jobs lower than the peak reached in January 2008.

Hiring managers have blamed uncertainty about the economic outlook and the ongoing political gridlock in Washington for their reluctance to take on more workers. Though they have been investing in new equipment and software to help boost production with the same number of workers, business investment remains relatively weak more than three years into the recovery.

"Investment has a tight leading relationship with private payrolls," said Beata Caranci, deputy chief economist at TD Economics. "You don't get a sustained pick-up in the second without the first."

Whatever the reason, the pace of job growth this far after a recession badly lags all but one recovery in the last half century.

Until the pace of job creation picks up convincingly, the Federal Reserve will likely continue to buy roughly $85 billion of bonds each month to keep interest rates low and try to spur growth. That prospect has been helping push stocks near to new heights.

Central bank policy makers on Wednesday renewed their commitment to the easy-money policy, which they have pledged to keep in place until the jobless rate falls below 6.5 percent.

Forecasters say that, based on other reports on the economy’s strength, that target won’t be hit for at least another year.

“We haven’t seen anything in the data yet that suggests that job growth is about to pick up to an area that is satisfying to the Fed," said Julia Coronado, chief economist for North America at BNP Paribas.