Unemployment Rate Drops to 4 1/2-Year Low

    The nation's unemployment rate dropped to a 4 1/2-year low as businesses cranked up hiring in January, an encouraging sign that the economy started the year on the right foot.

    The latest jobs picture, provided by the Labor Department on Friday, suggested that companies are feeling better about the economy's prospects as well as their own and thus are more inclined to hire. Good weather in parts of the country also helped, especially for construction work.

    The unemployment rate dropped from 4.9 percent to 4.7 percent, the lowest since July 2001.

    For blacks, the rate fell to 8.9 percent, the best since September 2001. The unemployment rate for Hispanics dipped to a five-month low of 5.8 percent.

    Payrolls grew by 193,000 in January, up from 140,000 in December. Job growth for December as well as for each of the months going back to August turned out to be stronger than the government previously reported.

    Employment gains were fairly widespread last month. Construction, manufacturing, health care, financial activities and other industries boosted payrolls. That blunted job losses in other areas including retailing, government and broadcasting.

    "There's no question we're getting back to better days for job creation," said Ken Mayland, economist at ClearView Economics. "There's been a sense of unease in the American workplace and this should help relieve that."

    The president wants Congress to make his tax cuts permanent. Democrats, however, contend that the tax cuts mostly helped the wealthy, did nothing to help the jobs climate and are a big reason why the government's balance sheets are bleeding red ink.

    Employees' average hourly earnings, meanwhile, climbed to $16.41 in January, up 0.4 percent from December.

    Analysts believe the pickup in workers' wages should help support consumer spending, a key shaper of overall economic activity. Retailers reported Thursday that they rang up better-than-expected sales in January. Economists predict the economy, which grew by an anemic 1.1 percent rate in the final quarter of last year, is rebounding smartly in the January-to-March quarter and should clock in at a 4 percent growth rate.