Saturday, February 5, 2011

Jobless rate fell to 9% in January

WASHINGTON - The unemployment rate is sinking at the fastest pace in half a century because a surprisingly large number of people say they're finding work.

The decline conflicts with a survey of businesses that showed weak job growth last month. But that survey doesn't count the self-employed and likely undercounts the nation's smallest businesses. Also, harsh weather disrupted business payrolls in January.

The unemployment rate dropped sharply last month to 9 percent, based on a government survey that found that more than a half-million people found work. A separate Labor Department survey of company payrolls showed 36,000 net jobs created - barely a quarter of the number needed to keep pace with population growth.

The government's survey of households, used to calculate the unemployment rate, measures the self-employed, farm workers and household employees. Many economists also say the household survey includes more people who work at small companies.

The number of people who called themselves self-employed rose by 165,000 to 9.7 million in January, the report said. That's the highest total since last May.

"It is clear that the drop in unemployment reflected more jobs being added, not a drop in the labor force," said Nigel Gault, chief U.S. economist at IHS Global Insight.

Snowstorms last month also affected the payroll survey. They cut into construction employment, which fell by 32,000, the most since May. Transportation and warehousing was also likely affected and fell by 38,000 - the most in a year.

"The thumbprints of the weather were all over this report," said Neil Dutta, an economist at Bank of America Merrill Lynch. Hiring was suppressed last month and will likely rebound in February, he said. "We know the job market is recovering."

In another bright spot, manufacturing added 49,000 jobs, the most since August 1998. Retailers added 28,000 jobs, the largest number in a year.

Treasury yields rose after the report came out, a sign that traders think the job market is improving.

The unemployment rate has fallen by eight-tenths of a percentage point in the past two months. That's the steepest two-month drop in nearly 53 years.

But part of that drop has occurred as many of those out of work gave up on their job searches. When unemployed people stop looking for jobs, the government no longer counts them as unemployed.

The number of people who have given up looking rose to 2.8 million last month, from 2.6 million in December. And the participation rate, which is the percentage of the working-age population working or looking for work, fell to a 26-year low of 64.2 percent. The number of people unemployed fell by more than 600,000 in January to 13.9 million. The January jobs report also includes the government's annual revisions to the employment data, which showed that fewer jobs were created in 2010 than previously thought. All told, about 950,000 net new jobs were added last year, down from a previous estimate of 1.1 million. The economy lost about 8 million jobs in 2008 and 2009.

by Christopher S. Rugaber Associated Press Feb. 5, 2011 12:00 AM

Jobless rate fell to 9% in January

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