Economy adds 157,000 jobs, unemployment ticks up to 7.9 percent

The economy added 157,000 jobs in January even as the unemployment rate ticked up to 7.9 percent, the Bureau of Labor Statistics (BLS) reported Friday. 

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The report also showed stronger job growth in November and December of last year, revising estimates for those two months up by 127,000 and suggesting the job market is somewhat stronger than previously estimated. 

The report comes days after the Commerce Department reported the economy had contracted in the fourth quarter of 2012 by .1 percent as reduced federal and defense spending took a huge bite out of growth. 

It also comes a day after the White House announced President Obama was disbanding his jobs council, a point Republicans highlighted in statements reacting to the jobs numbers. 

“This is the wrong time for President Obama to scrap his jobs council and delay his budget," Speaker John Boehner (R-Ohio) said. "Month after month we see the same thing: high unemployment and even more debt.

"Instead of accepting sluggish job growth as the new normal, we need to work together to grow our economy, address our debt crisis, and expand opportunity for all Americans," he said. 

The poor GDP growth led to new worries about the economy's strength and cast questions on President Obama's statement that the nation is in an economic recovery, but the job figures could calm some of those fears.

The new report says the economy cranked out 422,000 more jobs than initially estimated last year, pushing the total number created for the year to 2.17 million.

Revised figures for November now show the economy added 247,000 jobs that month, up from the 161,000 that were initially reported. In December, BLS estimates the economy added 196,000 jobs, up from the initially estimated 155,000. 

One reason for the increase in the jobless rate is that more people were looking for work. There was a 255,000 decline in discouraged workers from January a year ago, another sign of an improving job market.

Mark Zandi, chief economist for Moody's Analytics, said the strong revisions reflected the economy's momentum.

Still, the job market has a long way to go before making up for the jobs lost during the recession.

"I'm not sure anyone is going to feel really good until unemployment is below 6 percent," Zandi said on MSNBC on Friday. 

The GDP figures earlier this week showed the private sector is strengthening even as federal and local spending by governments has been cut. 

In the past three months, the BLS report said the private sector has added 624,000 jobs while the government has continued to shed positions, falling 24,000 in the same period.

Obama has been arguing that spending cuts alone will not help the economy, and Alan Krueger, the chairman of the White House Council of Economic Advisers, said in a statement on the report that Congress should replace spending cuts set to begin in March, known as sequestration.

"The administration continues to urge Congress to move toward a sustainable federal budget in a responsible way that balances revenue and spending, and replaces the sequester, while making critical investments in the economy that promote growth and job creation and protect our most vulnerable citizens," Krueger said. 

Construction employment increased by 28,000 in January while manufacturing employment was essentially unchanged — and has changed little since July.

Since reaching a low in January 2011, construction employment has gained 296,000 jobs, about one-third coming in the last four months, in tandem with an increase in housing construction.

Still, construction jobs are still 2 million below the previous peak level in April 2006.

This story was last updated at 9:48 a.m.