The U.S. economy created over 100,000 new jobs in January, the first significant monthly increase in over a year. But many economists had expected a much faster rate of job growth.

It is the fifth consecutive month of job creation and the gain brought the unemployment rate down slightly to five point six percent.

Economists had been predicting that as many as 200,000 jobs would be created in January. But Elaine Chao, President Bush's labor secretary has an optimistic assessment of the January figures.

"We're doing well. And certainly this month's signs are that the economy is doing well, growth is improving as well. We hope it will continue," he said.

The New York Stock Exchange rallied on the jobs report as market participants assume that interest rates will stay low as the economy may not be improving as fast as some optimists had thought.

Jim Smith, a business professor at the University of North Carolina, is encouraged by the January figures. He notes that the very modest gain of only 1,000 jobs for December was revised upwards to 15,000.

"Well, we have declining unemployment and increasing employment, finally. The payroll data are beginning to fall into line with every other indicator of the labor market, that jobs are becoming more plentiful and easier to get," he said. "More employers are hiring. And I would certainly expect that within a month the numbers for February will be two or three times as robust."

The U.S. economy has been booming with growth averaging nearly five percent in the second half of last year. However, job growth has been sluggish and below the normal pattern of an economic recovery. Slow job growth is explained in part by rising productivity as each individual worker is producing more, alleviating the need for more hiring.

Since President Bush took office three years ago the U.S. economy has lost 2.6 million jobs. The hard-pressed manufacturing sector lost jobs in January, the 42nd consecutive month of job loss. Most of the job creation in January came in the retail sector, which had net new hiring of 76,000 jobs.