January Jobs Report: Unemployment Rate Up to 7.9 Percent, 157,000 Jobs Added in January

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The U.S. economy added 157,000 jobs in January as the unemployment rate ticked up to 7.9 percent from 7.8 percent, according to data from the U.S. Labor Department.

"This jobs figure today indicates that the engine of the economy is revving, but the car isn't going anywhere," said Tom di Galoma, managing director at financial services firm Navigate Advisors LLC.

Employment numbers for November were revised higher to 247,000 from 161,000. For December, they were also revised higher to 196,000 from 155,000.

"The uncertainty will be around what happens with government jobs, because the uncertain impact of the fiscal cliff in December may have led to some layoffs in January," said Kevin Dunning, global economist at the Economist Intelligence Unit.

Although the fiscal cliff was ultimately resolved Jan. 1, Dunning said he expected layoffs for federal government workers.

Still, Dunning said hiring had "been quite resilient despite all the fiscal uncertainty."

Both state and local governments cut 9,000 jobs in January, while the private sector created 166,000 jobs for the month.

Dunning said the "strong" jobs growth in the fourth quarter of last year was at odds with the mild contraction in GDP announced Wednesday.

"This suggests that fourth-quarter GDP growth may yet be revised upwards," he said.

The Commerce Department announced Wednesday that U.S. GDP decreased by an annual rate of 0.1 percent in the last three months of 2012, the first time the economy has contracted since the second quarter of 2009.

According to the Bureau of Labor Statistics' Unemployment Insurance Weekly Claims Report, for the week ending Jan. 26, the advance figure for seasonally adjusted initial claims was 368,000, an increase of 38,000 from the previous week's unrevised figure of 330,000. The four-week moving average was 352,000, an increase of 250 from the previous week's unrevised average of 351,750.

Stephen Bronars, a senior economist with Welch Consulting in Washington D.C., cautions people not to "overreact" to January's jobs report.

"Careful observers examine the size of the seasonal adjustment. January is a very difficult month for the BLS to forecast," he said.

Typically, payroll falls by 2.8 million between December and January because of seasonal workers' leaving jobs after the holidays, he said. But a report released Thursday by payroll provider ADP noted that private-sector employment increased by 192,000 for January 2013, on a seasonally adjusted basis.

This report, which does not include government or public jobs data, noted that goods-producing employment increased by 15,000 jobs in January, primarily fueled by a 15,000 increase in construction jobs. Manufacturing jobs, however, were down by 3,000.

Service jobs, including restaurant workers, health care workers, housekeepers, teachers and retail sales positions, increased by 177,000, with professional/business services adding 40,000 jobs for the month, the ADP report said. Trade/transportation/utilities added 33,000 jobs, and financial services added 12,000 jobs.

Businesses with 49 or fewer employees added 115,000 jobs in January, according to the ADP report. Employment levels among medium-size companies, that is, those with 50 to 499 employees, rose by 79,000, while employment at companies with 500 or more employees fell by 2,000.

Carlos A. Rodriguez, president and chief executive officer of ADP, said in a statement that private sector employers created an average of 183,000 new jobs per month during the past three months, "an encouraging sign of steady improvement in the job market."

Economist Bronars noted that in January 2012, nonfarm payroll grew by 275,000 after seasonal adjustment (even though unadjusted payroll declined by 2.67 million), the biggest single month gain in the past 30 months.

"Even though jobs are being created, people who gave up searching for work are coming back into the labor force and will be counted as unemployed until they find work," Bronars said.

ABC News' Abby Ellin contributed to this report.

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