US unemployment drops to 8.3% The US unemployment rate dropped to a near-three-year low of 8.3 per cent in January as the economy added 243,000 new jobs, far above expectations. The increase in non-farm payrolls was the largest since April 2011 and surged past economists" forecasts of about 140,000 new positions. Job growth in November and December was also revised upwards by an additional 60,000, in contrast with fears that the earlier readings had reflected seasonal hiring during the end-of-year holiday and shopping period. December's total was increased to 203,000 from an originally reported 200,000, while November job growth rose to 157,000. All three major US stock indices rose, the dollar fell and bond prices dropped following the report, while oil prices ticked a little higher. "There can be no doubts over the positive nature of this report," said David Sloan, economist at IFR Economics. There is only one obvious significant caveat - an unusually mild winter restricting the number of seasonal lay-offs, which are always heavy in January. The decline in the unemployment rate to the lowest level since February 2009 was driven not by discouraged workers giving up on job searching but by actual gains in employment, said Patrick O'Keefe, director of economic research at J.H. Cohn, the financial accounting firm and consultancy. Households have been reporting good gains for some time now. It will bolster consumer confidence and that will feed back into the economy," he said. But he cautioned that the labour market is "still one of the strong weaklings on the playground," noting that "the proportion of the working age population that have jobs remained flat. . . Job growth is keeping pace with population growth but is not much stronger. The improving condition of the labour market will likely delay a further round of quantitative easing by the Federal Reserve, analysts said. "Their argument is that even at 8.3 percent, the level of unemployment is still unacceptably high, but it will give them pause," Mr O'Keefe said. Private sector job growth jumped to 257,000, exceeding a report on private job creation earlier in the week from payroll processor ADP that said US companies added 170,000 new workers. The labour department's report showed a broad-based increase in employment, with the manufacturing, professional services, healthcare, retail and hospitality sectors all reporting gains. Public sector employment was down 14,000 as the federal and local governments cut workers. Growth in manufacturing jobs was especially robust, with 50,000 new workers added over the month, mainly in factories that produce long-lasting durable goods. That compared with expectations of 12,000. Construction employment added 21,000 jobs, down from 31,000 in December. "Warm weather will also be regarded as an important factor, and no doubt helped some sectors like construction, but gains were broad even in sectors that are less weather sensitive," said Alan Ruskin, strategist at Deutsche Bank. The Obama adminstration cited the report as "further evidence that the economy is continuing to heal" and called for support for its stimulus policies. Alan Krueger, chairman of the president's council of economic advisers, said: "We need to extend the payroll tax cut and continue to provide emergency unemployment benefits through the end of this year, and take the additional steps that President Obama proposed in his State of the Union address to create an economy built to last." The labour department figures included an annual benchmark revision that added 165,000 to the payroll count from April 2010 to March 2011. The data confirmed recent indications that a labour market recovery is accelerating. Other figures released this week showed lay-offs appear to be slowing, with the four-week moving average of first-time claims for unemployment benefits falling to 375,750 last week, although weekly claims have see-sawed over the past month. Economists say volatility in the weekly data are generally heightened over the holiday period because of large seasonal adjustment factors.