06/02/2011
US payrolls barely grow, but jobless rate drops
Global Stock Markets Weekly Report
State of California Employment Program Representative, Brigitta Croil, assists job seeker Freddy Gomez, to look for driver job position at the Verdugo Job Center in Glendale, California. The unemployment rate dropped sharply last month to 9 percent, the lowest level in nearly two years. But the economy generated only 36,000 net new jobs, the fewest in four months. (AP)
US employment rose by a meager 36,000 jobs in January, far less than expected, as severe snow storms slammed large parts of the nation, but the unemployment rate fell to its lowest level since April 2009.
The increase in nonfarm payrolls reported by the Labor Department on Friday was a quarter of the 145,000 increase that economists had expected.
The government noted that severe weather could have affected construction payrolls, which dropped 32,000 last month. There were also large declines in the employment of couriers and messengers.
A department official also said 886,000 people in the separate household survey said they did not work in January because of severe weather. “Weather did have an impact, construction was weak, below trend, and transportation and warehousing was also pretty soft and that could be affected by weather,” said Sean Incremona, an economist at 4Cast in New York.
The modest jobs gains are at odds with other data for January, which had suggested employment growth was picking up and had raised hopes that the manufacturing-driven recovery was now spreading to other sectors of the economy.
There was some good news in the employment report as the jobless rate fell to 9 percent from 9.4 percent in December. The household survey from which the unemployment rate is derived showed the number of unemployed dropped by about 600,000 last month.
The unemployment rate had previously declined largely as a result of people giving up the search for work, but in January the labor force was unchanged, even after adjustments for updated population controls. Still, the decline is unlikely to discourage the Federal Reserve from completing its $600 billion government bond-buying program to support the economy, as discouraged jobseekers are expected to return to the labor market.
The labor market has lagged the broader economy, which grew at a 3.2 percent annual rate in the fourth quarter. Fed Chairman Ben Bernanke on Thursday acknowledged the pick-up in the recovery, but said “it will be several years before the unemployment rate has returned to a more normal level.”
The government revised November and December payrolls to show 40,000 more jobs created that previously estimated.
The Labor Department also finalized its annual benchmark revisions to its payroll series, which showed the level of employment for March 2010 overstated by 378,000.
Last month, the private services sector added only 32,000 jobs after increasing 146,000 in December. The sector accounts for more than 80 percent of jobs in the United States.
Payroll increases in goods-producing sectors rose 18,000, as manufacturing employment grew 49,000, the largest increase August 1998, after rising 14,000 in December.
Government payrolls dropped 14,000 in January, marking a third straight month of declines, pulled down state and local governments.
The weather effect was also apparent in the average workweek, which slipped to 34.2 hours from 34.3 hours in December.
