Tags: US Adds Meager 36 | 000 | Jobless Rate Falls to 9 Percent

Unemployment Rate Falls to 9 Percent

Friday, 04 Feb 2011 08:34 AM

The U.S. jobless rate unexpectedly fell in January to the lowest level since April 2009, while payrolls rose less than forecast, depressed by winter storms.

Unemployment declined to 9 percent last month from 9.4 percent in December, the Labor Department said today in Washington.

Employment rose by 36,000 workers, the smallest gain in four months, after a 121,000 rise in December that was larger than initially reported. Payrolls were projected to climb 146,000, according to the median forecast in a Bloomberg News survey.

“Snow suppressed payrolls but look past it and the labor market is clearly improving,” said Ward McCarthy, chief financial economist at Jefferies & Co. in New York. McCarthy projected an 85,000 gain in January employment.

Payrolls in construction and transportation, industries most affected by bad weather, dropped in January, while factory employment rose the most since August 1998.

Federal Reserve Chairman Ben S. Bernanke is among policy makers still concerned the pickup in growth is failing to revive the labor market quickly, one reason why the Fed said it will continue a plan to add another $600 billion into the economy.

Stock-index futures maintained gains and Treasurys fell after the report. The contract on the Standard & Poor’s 500 Index expiring in March rose 0.1 percent to 1,304.5 at 8:42 a.m. in New York. The yield on the 10-year Treasury note, which moves inversely to price, climbed to 3.6 percent from 3.55 percent late yesterday.

Companies like Ford Motor Co. and Emerson Electric Co. are hiring as consumer spending, business investment and exports climb, signaling the expansion is gaining momentum.

‘Right Direction’

“We’re moving in the right direction, though payrolls are still at extremely low levels,” Omair Sharif, an economist at RBS Securities Inc. in Stamford, Connecticut, said before the report. “We’re just digging ourselves out of a real big hole and it’s going to take time.”

Payroll estimates in the Bloomberg survey of 85 economists ranged from a decline of 5,000 to a gain of 230,000. December employment was revised up from a previously reported gain of 103,000, while November payrolls increased 93,000 after an initially reported 71,000 rise.

The unemployment rate was projected to rise to 9.5 percent, according to the survey median. Estimates ranged from 9.2 percent to 9.6 percent.

The jobless rate declined as the number of unemployed fell by 590,000. A 162,000 drop in the size of the labor force also helped push down the rate.

Manufacturing Jobs

Private hiring, which excludes government agencies, rose 50,000 in January. Factory payrolls increased by 49,000 in January, exceeding the survey forecast of a 10,000 gain.

Employment at service-providers rose 18,000. Construction payrolls dropped 32,000 and transportation and warehousing jobs fell by 38,000. Retail trade employment rose 27,500.

A storm that spread from the Midwest and the South to New England during the week covered by the Labor Department’s employer survey likely depressed January numbers as businesses temporarily closed.

Bad weather prevented 707,000 Americans from going to work in the January survey week, the Labor Department’s survey of households showed today. That compares with an average of 282,000 over the previous five Januarys. Economists at Morgan Stanley said before the report a figure around 475,000 would be consistent with about a 50,000 reduction in overall payrolls.

Government payrolls decreased by 14,000. State and local governments reduced employment by 12,000, while the federal government trimmed 2,000 workers.

Earnings, Hours

Average hourly earnings rose to $22.86 from $22.78 in the prior month, today’s report showed.

The average work week for all workers fell to 34.2 hours, from 34.3 hours the prior month.

The so-called underemployment rate — which includes part-time workers who’d prefer a full-time position and people who want work but have given up looking — decreased to 16.1 percent from 16.7 percent.

The report also showed an decrease in long-term unemployed Americans. The number of people unemployed for 27 weeks or more decreased as a percentage of all jobless, to 43.8 percent from 44.3 percent.

With today’s report, the government issued revisions to payroll figures going back to 2006. It also announced the annual benchmark update, which aligns the data with corporate tax records and covers the period from April 2009 to March 2010. The Labor Department had estimated in October that payrolls for the 12 months would be cut by 366,000.

Last Year

The revisions showed the economy lost 8.75 million jobs as a result of the recession. For all of 2010, the U.S. added about 909,000 jobs. Economists surveyed by Bloomberg in January projected unemployment will average more than 9 percent this year.

“Until we see a sustained period of stronger job creation, we cannot consider the recovery to be truly established,” Fed Chairman Ben S. Bernanke said yesterday in a speech at the National Press Club in Washington. “It will be several years before the unemployment rate has returned to a more normal level.”

Economic growth accelerated to a 3.2 percent annual rate in the fourth quarter of 2010 as consumer spending climbed by the most in more than four years. Emerson, the maker of data-center equipment and thermostats, plans to boost global employment this year by about 7,000 workers to meet rising sales.

“We are planning a very strong 2011,” Chief Executive Officer David Farr said on a Feb. 1 conference call with investors. “There’s definitely a point in time that we’re going to have to start bringing people in.”

Lowe’s and Ford

Lowe’s Cos., the second-biggest U.S. home-improvement retailer, plans to add 8,000 to 10,000 weekend sales positions to improve staffing at the busiest time of the week. The Mooresville, North Carolina-based chain also will cut 1,700 middle-management jobs as profit growth trails that of larger rival Home Depot Inc.

The two largest U.S. automakers are expanding. Dearborn, Michigan-based Ford plans to hire more than 7,000 workers in the next two years. Larger rival General Motors Co., based in Detroit, will add a third shift and about 750 jobs to its assembly plant in Flint, Michigan.

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The U.S. jobless rate unexpectedly fell in January to the lowest level since April 2009, while payrolls rose less than forecast, depressed by winter storms. Unemployment declined to 9 percent last month from 9.4 percent in December, the Labor Department said today in...
US Adds Meager 36,000,Jobless Rate Falls to 9 Percent
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2011-34-04
Friday, 04 Feb 2011 08:34 AM
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