U.S. Loses 20,000 Jobs

Unemployment dips to 9.7%

Offering mixed signals about prospects for a sustainable economic recovery, 20,000 jobs were lost in January, as reported by The Labor Department.

The unemployment rate eased to 9.7% from 10% in December, based on a household survey that appeared to contradict the payrolls data, but reflected in part discouraged workers leaving the labor force.

The nonfarm payrolls data, one of the best indicators of economic momentum, fell short of expectations for a gain of 15,000 jobs that would have been a clear sign of a turnaround in the troubled labor market and overall economy.

The January report showed a loss of 60,000 jobs in the goods-producing sector -- a hefty decline of 75,000 construction jobs offset a gain of 11,000 in manufacturing and 4,000 in mining.

The services sectors added 48,000 jobs including 42,000 in retail and 44,000 in financial activities that offset losses in other segments.

The report showed the average workweek, sometimes seen as a proxy for economic activity, rose slightly to 33.3 hours from 33.2 hours. Average hourly earnings rose 0.3%.

"This was a mediocre report," said Dana Johnson, chief economist at Comerica Bank. Still, Johnson said there were encouraging signs in the data including a rise in the workweek, increased income and more temporary workers hired. "I frankly was encouraged" by these elements, he said.

"I would be surprised if we didn't see private-sector job growth in February and March that will show a sustainable expansion. It's just not visible yet," added Johnson.

The White House said the report was encouraging but shows many Americans are still struggling to find employment. "While unemployment remains a severe problem, today's employment report contains encouraging signs of gradual labor market healing," said White House economic adviser Christina Romer.

Romer said "the unemployment rate remains unacceptably high," and noted that the actual number of unemployed Americans had risen slightly.

The figures included a revision of 2009 data, which showed about 600,000 more job losses than previously estimated. The revisions showed a loss of more than 4.8 million jobs in the year and 8.4 million since the recession began in December 2007.

For December, the data was revised to show a steep drop of 150,000 jobs instead of the 85,000 previously estimated. But November data was revised to show a gain of 64,000 jobs instead of a rise of 4,000.

Official figures last week showed the U.S. economy roared back to life with a 5.% growth pace in the fourth quarter, led by brisk business spending that offset sluggish consumer activity.

The report on gross domestic product (GDP) showed the strongest growth in six years, but economists say the figure was boosted by special factors such as inventory restocking and may not be sustained unless employment picks up.

The economy has shown growth in the past two quarters after four quarters of contraction and the worst recession in decades. But an economic panel recognized as the arbiter of business cycles has not declared an end to the recession, based on its criteria.

Copyright Agence France-Presse, 2010

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