Hiring increased in January after accelerating more than previously estimated at the end 2012, evidence the U.S. labor market was making progress even as lawmakers quarreled over thefederal budget.

Payrolls rose 157,000 following a revised 196,000 advance in the prior month and a 247,000 surge in November, Labor Department figures showed today in Washington. The revisions added a total of 127,000 jobs to the employment count in November and December. The jobless rate increased to 7.9 percent from 7.8 percent.

Sustained hiring gains will give incomes a lift, buffering American workers from the sting of higher payroll taxes and helping them keep spending. At the same time, bigger employment advances are needed to drive down a jobless rate that Federal Reserve officials say is too high.

"Improvement in the labor market is continuing," Jonathan Basile, a U.S. economist at Credit Suisse in New York, said before the report. "Even though there were concerns about the fiscal cliff, it looks like they did not show up in hiring decisions."

And:

The economy has recovered 5.51 million of the 8.74 million jobs that were lost as a result of the last recession.

The median duration of unemployment fell in January to 16 weeks from 18 weeks a month earlier. The number of people out of work for 27 weeks or more decreased as a percentage of all the jobless to 38.1 percent from 39.1 percent.

David Fuller's view This is a mildly encouraging result although economic data remains mixed.

Nevertheless, recent economic developments should not be reviewed only in the context the last few months. From a market perspective, the more important question is: has the trend of economic activity improved or deteriorated from what people were forecasting and expecting six months ago or even earlier?

Clearly, people feel better about the world today. The next question concerns how realistic or unrealistic these expectations are likely to be? If we answer this subjectively, most of us will be heavily influenced by earlier fears understandably developed during the last decade.

However, if we had been either hibernating or meditating on a mountain top for the last few years, and returned to this busy world today, we might form a very different opinion without hesitation. For instance, knowing that stock markets are often viewed as a lead indicator, we might feel reasonably optimistic following our return to worldly events. We might also be pleased to note that in our absence we had only missed a particularly choppy period.

This might not have been the case if we had commenced our reintroduction by reading economic reports and considering the opinions of others, rather than looking at our charts for the markets. However, if we had started by forming our own opinions, based on market facts, we would have questions about the past but most likely conclude that we had returned at a propitious time.

Moreover, the cautious opinions expressed by others might encourage us that the recovery had further to run over the medium term. Therefore, stock market pullbacks in response to recently sharp gains were more likely to provide additional buying opportunities, rather than signal the beginning of another serious market rout similar to 2000 or 2008.

(See also Wednesday's Comment.)