--US January payroll jobs +268,000; jobless rate +0.2 pt to 4.2%
--BLS: Jan job gain reflects seasonal adjustment in construction, govt
--US December payroll jobs revised to +19,000 from +105,000
--US January unemployment rate highest since September 1999
--BLS aide sees construction, gov't jobs returning to trend in Feb
--US Jan avg hourly earnings unchanged; December unrevised at +0.4%
--US January avg hourly earnings +3.9% from yr ago; Dec +4.3%
--US January private payrolls +214,000; government +54,000
--US Jan available labor pool up to 10.4 mln; December 10.2 mln
--US January workweek +0.2 hr; manufacturing workweek +0.5 hr
--US Jan weekly hours index +0.9% to 151.8; factory index +0.8%
--US Nov payroll jobs revised to +53,000 from +59,000
--US Jan construction jobs +145,000; service producer jobs +183,000
--US January factory jobs -65,000; federal government +37,000

By Simon Kennedy and Andrew Williams, BridgeNews
Washington--Feb. 2--Unusually large seasonal adjustment increases in construction and federal government employment drove U.S. non-farm payrolls up 268,000, well above private forecasts. January job growth also topped the revised December payroll gain of 19,000--previously reported at 105,000, the Labor Department reported Friday. However, the unemployment rate ticked up to 4.2% for the first time since September 1999.
* * * "To a great extent, January's job gain reflected unusually large seasonally adjusted increases in just two areas--construction and the federal government," Bureau of Labor Statistics Commissioner Katharine Abraham.
Construction unemployment rose by 145,000 jobs after the seasonal adjustment, more than offsetting weather-related employment declines in November and December.
"The weather in those months was unusually severe, resulting in larger-than-expected seasonal layoffs," Abraham said. "In contrast, January's weather was relatively mild, and there were far fewer layoffs than expected."
It would take future months' data to discover whether January's large job gain "reflects underlying strength in construction or merely the problems inherent in seasonally adjusting estimates of employment for the industry during the winter months," Abraham added.
Meanwhile, federal government jobs climbed by 37,000 in January. But Abraham said that gain "resulted from an unusually large increase in postal employment after seasonal adjustment." While January traditionally is a layoff month at the postal service, as extra holiday staff are released, this year "our survey did not register the typical holiday buildup...and consequently did not register the typical post-holiday layoffs," she said.
Analysts had projected an increase of 82,500 in jobs, and an unemployment rate of 4.1%.
But their expectations that the employment data would be the latest indicator to suggest a sharply slowing economy were perhaps supported by the unemployment rate's return to 4.2%. Further weakness was displayed by the manufacturing sector, where employment fell for the sixth straight month, dropping 65,000 after a revised drop of 56,000 in December. The factory sector is now in recession, having been battered by waning demand, high interest rates and soaring energy bills.
Another sign of an easing labor market was the labor utilization pool, which swelled to a seasonally adjusted 10.4 million in January, from 10.2 million in December. This gauge represents the sum of those employed and those who say they want a job but are not actively seeking work.

OTHER DETAILS
Service producers added 183,000 workers to payrolls in January. Within this sector, retail businesses added 27,000 workers. The narrow services category, which includes a variety of business and health services, showed a rise of 81,000 during the month.
The average workweek increased 0.2 hour to 34.3 hours. It was 34.1 hours in December.
The manufacturing workweek rose 0.5 hour to 40.9 hours, with factory overtime hours up 0.1 hour to 4.1 hours.

EARNINGS
--In a sign of easing wage pressures, average hourly earnings were flat in January at $14.02.
--Hourly earnings in January were up 3.9% from a year earlier, a deceleration from December's revised 4.3% year-on-year gain, which was the highest rate of year-on-year increase since June 1998.
WHAT WAS EXPECTED
January non-farm payroll growth topped private forecasts in the BridgeNews survey, which ranged from down 35,000 to up 185,000. Expectations for the unemployment rate were 3.9% to 4.2%, while forecasts for average hourly earnings ranged from up 0.2% to up 0.4%. End
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