36,000 jobs added in January; unemployment rate falls to 9%

1:47 PM, Feb 4, 2011   |    comments
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WASHINGTON - Employers added only 36,000 jobs in January, far fewer than expected, as manufacturing posted its strongest gains since the late 1990s, but construction and transportation businesses shed workers. Economists largely attributed the disappointing showing to severe weather.

The nation's unemployment rate, which is calculated from a different survey less affected by weather, fell to a 21-month low 9% from 9.4% in December, the Bureau of Labor Statistics reported. The jobless rate has now dropped sharply two straight months and is down from 9.8% in November.

But economists, such as RDQ Economics, said the severe weather likely kept Americans from looking for work, artificially reducing the labor force and pushing down the jobless rate.

"We look for the unemployment rate to rise back toward 9.5% and payrolls to jump significantly in February," RDQ said in a research note.

Economists also largely downplayed January's meager payroll increase because 886,000 Americans said they couldn't' get to work last month because of bad weather, vs. a January average of 417,000.

"Clearly the rise in payrolls was held down by weather," says Jim O'Sullivan, chief economist of MF Global.

That could result in a big jump in payroll employment next month. Economists had estimated that 146,000 jobs would be added in January.

Perhaps more disheartening in Friday's report was that annual government revisions to employment data showed the nation gained only 909,000 jobs in 2010, vs. the 1.1 million previously estimated.

Yet the recent trend has been positive. Employment figures for November and December were revised up by 40,000.

Economic reports have shown strong job gains in both the manufacturing and service sectors in recent months.

"It looks like the trend is accelerating significantly," O'Sullivan says.

Joel Naroff of Naroff Economic Advisors, says," The labor market is getting better, but not quite at the pace we'd like to see."

After adding an average 75,000 jobs a month in 2010, after the recent revisions, O'Sullivan and other economists expects monthly job gains to pick up significantly to about 200,000 by mid-year.

An encouraging sign: The number of people working part-time even though they wanted full-time work fell to 8.4 million from 8.9 million. That helped lower the underemployment rate - which also includes the unemployed and discouraged workers who've stopped looking - to 16.1% from 16.7%.

And the ranks of those out of work at least six months fell to 6.2 million from 6.4 million.

The number of temporary workers, however, fell 11,400 after adding an average 25,000 jobs a month the past year. And the average hours worked dipped to 34.2 hours from 34.3 hours a week. Increases in temporary workers and the work week typically augur growth in permanent staffing. But O'Sullivan said both categories were likely dampened by snowstorms.

The manufacturing industry gained 49,000 jobs, most since 1998, largely because of surging automobile sales. Retailers added 27,500 jobs and professional and business services add 31,000.

But the beleaguered construction industry lost 32,000 jobs, transportation and warehousing shed 38,000 and financial firms cut 10,000. Budget-strapped state and local governments chopped 12,000 workers while the federal government cut 14,000.

Paul Davidson, USA TODAY

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