WASHINGTON -- America's record-breaking economy surged into the new year with employers adding 387,000 jobs, pushing the unemployment rate down to a 30-year low of 4 percent.
January's rate was down from a 4.1 percent rate in December and the lowest level since a 3.9 percent rate in January 1970. The January improvement reflected strong job growth in the service sector, construction and in business services. Even employment at factories, which have been shedding jobs, increased.The economy entered 107 months of uninterrupted growth on Tuesday, the longest expansion in U.S. history, beating the old mark of 106 months set during the 1960s.
President Clinton boasted about the unemployment report, saying: "Today's strong employment numbers confirm once and for all that this is the longest economic expansion in our history," Clinton said. "The milestone is a credit to the American people, to their hard work. It also clearly highlights the need for us to stay on the path of fiscal discipline, overseas markets, investment in our people, that got us to this point."
The 387,000 jobs employers added to their payrolls in January -- the biggest gain since September 1997 -- was much stronger growth than the 250,000 jobs many analysts were expecting.
In December, 316,000 workers found jobs, slightly more than 315,000 previously reported by the government.
Average hourly earnings, a key gauge of inflation pressures, rose 0.4 percent to $13.50 in January, the fastest pace since September. That increase in hourly earnings was slightly higher than the moderate 0.3 percent rise some analysts expected. In December, wages grew by 0.3 percent.
Last week, another Labor Department report showed that employees' wages and benefits surged a worrisome 1.1 percent in the fourth quarter, rekindling worries about inflation and higher interest rates and causing the stock market to plunge.
While strong wage and job growth is good for workers, economists and members of the Federal Reserve worry that the combination could rekindle inflation. Their shared concern: that employers trying to attract scarce workers to fill job openings lure them with higher wages and benefits -- increased costs that could drive up consumer prices.
The Federal Reserve raised interest rates Wednesday by a quarter of a percentage point -- the fourth increase since June -- to slow the supercharged economy and keep inflation from escalating. Given continuing strong growth, many analysts expect additional rate increases this year.
Economists said today's report provides the Fed with ammunition to raise interest rates again in March.