Washington The nation's unemployment rate jumped to 4.2 percent in January, the highest level in 16 months, as the sharp economic slowdown resulted in a loss of 65,000 manufacturing jobs.
The Labor Department's unemployment report Friday nevertheless offered rays of hope that the country can avoid a full-blown recession, showing surprisingly strong job growth in construction and other areas.
Economists viewed the report as depicting an economy weak but not in danger of toppling into free-fall. They were encouraged that overall payrolls increased last month at three times the expected amount, by 268,000 new jobs, the strongest showing in nine months.
"Most of the really alarming data has related to the manufacturing sector, which clearly is slumping, but since it only accounts for about 15 percent of total employment, it isn't dragging everything else down," said Bill Cheney, chief economist for John Hancock Financial Services.
Average hourly earnings showed no change in January, remaining at $14.02 an hour, a byproduct of the slowing economy. The length of the average work week, which posted a big drop in December, rebounded slightly to 34.3 hours in January.
The last time the unemployment rate stood at 4.2 percent was in September 1999. Many analysts had expected a January rate of 4.1 percent.
Economists are forecasting a jobless rate as high as 4.5 percent by summer.