Employment grew modestly in January and gains in the prior two months were bigger than initially reported, supporting views the economy's sluggish recovery was on track despite a surprise contraction in output in the final three months of 2012.

Employers added 157,000 jobs to their payrolls last month, the Labor Department said on Friday. There were 127,000 more jobs created in November and December than previously reported.

According to Jed Kolko, chief economist and head of analytics at Trulia, big gains came in the construction sector.

"Residential construction jobs were up 2.6% year-over-year – while total employment was up only 1.5%," Kolko explained. "Most of the residential construction job growth is among “residential specialty trade contractors” (+3.5% year-over-year), not general contractors, construction management, or spec builders (+0.4% year-over-year). The 2.6% growth in residential construction jobs reflects the total of these two categories and gives the most accurate picture of housing job growth."