Jobless Rate May Signal Slowing Growth --- January Rise to 5.7% Comes After Year-Long Drop; Fed Moves Seen as Key
WASHINGTON -- The first significant sign that the economy is cooling emerged when the Labor Department reported that the unemployment rate rose for the first time in more than a year.</br></br>The unemployment rate for January jumped 0.3 percentage point to 5.7%, matching October's level. The Labor Department also reported that employers created only 134,000 jobs last month, about half the pace of previous months and the smallest gain in a year.</br></br>While economists were careful to note that the new data suggest the economy is still growing, many agreed the report seems to indicate the year-long series of interest-rate rises engineered by the Federal Reserve finally have kicked in.</br></br>"It takes about 12 months for the rate hikes to have an effect," said Edward Yardeni, an economist at C.J. Lawrence. "This is the year we'll see it happen."</br></br>The financial markets rallied on the news as investors speculated that interest rates may soon stop rising. Bond prices rose; the yield on the benchmark 30-year bond fell to 7.62% from 7.74%. And the Dow Jones Industrial Average soared 57.87 to 3928.64.