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WASHINGTON, Feb 1 AFP

February 02 2013, 03:29AM

Unemployment in the United States ticked up in January while jobs growth slowed, but the labour market had a better year in 2012 than previously estimated, the government says.

The US jobless rate rose to 7.9 per cent in January from 7.8 per cent in December, the Labor Department reported on Friday. The rate was around the level where it had been since September.

The economy added 157,000 jobs, with job growth slowing from December's sharply upwardly revised reading of 196,000.

After a sweeping annual revision of earlier data, the department also said monthly job growth averaged 181,000 in 2012, well above the prior estimate of 153,000 jobs.

The revisions revealed the labour market was far stronger than thought despite worries that the looming year-end fiscal cliff had dampened activity.

"Those revisions highlight even more how remarkably resilient the US labour market has been over the last two quarters," said Harm Bandholz of UniCredit, citing a slump in capital investment and the economy's unexpected 0.1 per cent contraction in the fourth quarter.

The private sector added jobs for the 35th straight month, at 166,000 jobs. Government jobs fell by 9,000.

The White House said the latest data showed further healing from the worst recession since the Great Depression, but "more work needs to be done".

"Today's report is a reminder of the importance of the need for Congress to act to avoid self-inflicted wounds to the economy," Alan Krueger, head of President Barack Obama's Council of Economic Advisers, said.

Bitterly divided political leaders have until March to reach a deal to avoid automatic across-the-board federal spending cuts.

"The job market is healthier than we had previously thought," said Jason Schenker of Prestige Economics. "The outlook is positive and one of increased growth in the year ahead."

Employment in January rose notably in retail trade, construction and health care, while jobs in transportation and warehousing slipped.

There was little change in manufacturing employment, which has been essentially flat since July 2012.

The January readings were less positive than expected; the average estimate was that the jobless rate fell to 7.7 per cent and a net 180,000 positions were added.

The number of unemployed, based on a separate household survey from the one producing the job creation numbers, rose by a little more than 100,000, to 12.33 million.

The employment-population ratio and the civilian labour force participation were essentially unchanged.

"The rise in the unemployment rate was a disappointment, and the January rise in payrolls was a little below the recent trend - especially after the upward revisions - although we also know how unreliable January data can be," said Jim O'Sullivan at High Frequency Economics.

Economists aid the upturn in housing and reconstruction after Hurricane Sandy pointed to more gains in construction jobs.

The January uptick in unemployment reaffirmed the Federal Reserve's ultra-loose monetary policy to support the tepid recovery, analysts said.

"While the Federal Reserve won't be happy to see job growth slow, the rise in the unemployment validates their plans to keep monetary policy easy for the foreseeable future," said Kathy Lien of BK Asset Management.

By Veronica Smith