The U.S. unemployment rate unexpectedly dropped to 9.7 percent in January from 10 percent in the prior month, but employers eliminated an additional 20,000 net jobs over the month, the government said Friday in a report that shows the labor market has yet to turn the corner despite the return of growth to the economy.
The January jobless figure was based on new population data from the Census Bureau, which complicates comparisons with the December employment statistics. The unemployment rate is calculated from a survey of about 60,000 households, using estimates of the population and the labor force ? those who are working and looking for work. The latest survey showed 541,000 more people as employed in January than the previous month, some of which probably reflects an increase in the self-employed and hiring by new firms that are often hard to capture during turning points in the economy. The overall labor force was roughly unchanged last month.
But the payroll jobs data were not particularly encouraging. These figures, which economists consider more reliable than the household report, are based on a survey of 160,000 businesses and government agencies. In addition to last month’s total net payroll decline of 20,000, the Bureau of Labor Statistics said the economy lost 150,000 jobs in December ? 65,000 more than previously estimated.
What’s more, Friday’s report included revisions of prior payroll statistics, and that showed the recession was much more severe in destroying jobs than previously reported. The new figures indicate that the American economy eliminated 8.4 million jobs since the recession began officially in December 2007 ? about 1.2 million more than initially estimated.
The good news is that job declines have moderated sharply, from a high of 753,000 monthly payroll losses on average in the first quarter of 2009 to an average monthly fall of 103,000 in the final quarter of last year ? a trend that continued into January.
The latest January report also showed some hopeful signs.
Although construction continued to cut payrolls, losing another 75,000 last month, manufacturing employment turned up slightly for the first time in many months. There were also net job gains in retail, health and education services and the temporary-help industry, which is seen as a harbinger of broader hiring.
Overall, the labor market remains weak, with some 6.3 million people who have been unemployed for six months or longer.
Analysts generally don’t see an immediate turnaround in the job outlook.
In its January survey of small businesses nationwide, the National Federation of Independent Business said new firms being started may add some to the job figures, but companies already in existence are not creating jobs yet. Over the next three months, the survey said, more small employers are expecting to cut jobs than those planning to add to their payrolls.
(c) 2010, Tribune Co. Source: McClatchy-Tribune Information Services.