Jobless Rate Falls To 9.7 Percent

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The U.S. unemployment rate fell to 9.7 percent in January, down from 10 percent the month earlier. Still, government figures show the economy lost another 20,000 jobs last month.


From NPR News, this is ALL THINGS CONSIDERED. I'm Robert Siegel.

And we begin this hour with a number: 9.7. On its own, not terribly interesting, but when you consider that the unemployment rate in January fell to 9.7 percent from 10 percent, well that's interesting. And it's fair to say, it's a surprise to most economists - surprise, but not entirely good news. The other headline number in the jobs report confused things a bit. It showed a net loss of jobs - 20,000 of them.

To help make sense of things, NPR's John Ydstie has this report.

JOHN YDSTIE: So, how can the unemployment rate improve while businesses continue to cut jobs? The big reason is that the two headline numbers in the Monthly Employment Report are produced by two separate surveys. To get the unemployment rate, the government interviews 60,000 households every month. To report the number of payroll jobs gained or lost, the government questions about 400,000 businesses. In January, the survey of business payrolls found a net loss of 20,000 jobs. But interviews with households revealed a gain of 541,000 jobs.

Mr. TOM NARDONE (Assistant Commissioner, Bureau Of Labor Statistics): The household survey estimates tend to be more variable.

YDSTIE: Tom Nardone, an assistant commissioner at the Bureau of Labor Statistics, says the household survey can experience very big swings, as it did in the January survey released today.

Mr. NARDONE: The big increase in employment this month follows a very big drop in employment in December. And that's why people tend to focus on the payroll survey for measuring job change over the month. It has a larger sample and the estimates tend to be less variable on a month-to-month basis.

YDSTIE: But, says economist Bill Cheney of John Hancock Financial, the household survey does pick up some things the survey of business payrolls doesn't.

Mr. BILL CHENEY (Economist, John Hancock Financial): The payroll survey definitely does miss the creation of jobs by small businesses around the turning points in the business cycle, which is exactly where we are now. So, there are reasons to think that this may be one of those moments where the household survey is telling us something even though it's normally not quite so reliable.

YDSTIE: Ironically, the normally reliable payroll survey has been erratic lately. November's payroll report was revised to show much stronger job growth than previously thought, but the December revision went the other direction, showing much larger job losses for that month. Despite the January payroll losses, there were some silver linings in today's report that suggest job growth will take off soon, says Bill Cheney.

Christina Romer, head of the White House Council of Economic Advisers, agrees there are some encouraging signs in the payroll report.

Ms. CHRISTINA ROMER (Head, White House Council of Economic Advisers): Manufacturing employment grew for the first time in a long time. Retail trade employment actually grew, temporary employment that's been going up for several months kept going up. Obviously, others like construction, we're still seeing important losses. But, you know, I think on net, we are kind of at the stability point.

YDSTIE: But the Obama administration isn't taking any chances. The president was in Lanham, Maryland, today pushing his small business job creation proposals. He had this response to the fall in the unemployment rate and the pick up in areas like manufacturing.

President BARACK OBAMA: Now, these numbers, while positive, are a cause for hope, but not celebration because far too many of our neighbors and friends and family are still out of work.

YDSTIE: The president unveiled another initiative today aimed at helping small businesses boost hiring. It would let small businesses refinance commercial real estate loans with the Small Business Administration. One revision in today's employment report was very sobering. It put the number of jobs lost during this recession at 8.4 million. That's about a million more than originally estimated.

John Ydstie, NPR News, Washington.

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Jobless Rate Unexpectedly Drops To 9.7 Percent

Stephanie Buckley, of Boston  has her resume reviewed i

Stephanie Buckley, of Boston (second from right), has her resume reviewed by Shelly Piper, of Cape Ann, Mass. (right), at the BostonHires job fair in a hotel in Boston, Tuesday. Steven Senne/AP hide caption

toggle caption Steven Senne/AP
Stephanie Buckley, of Boston  has her resume reviewed

Stephanie Buckley, of Boston (second from right), has her resume reviewed by Shelly Piper, of Cape Ann, Mass. (right), at the BostonHires job fair in a hotel in Boston, Tuesday.

Steven Senne/AP

A major revision in the data helped push the nation's unemployment rate down to 9.7 percent even as U.S. employers shed 20,000 jobs in January, the government said Friday, in a report that offered some encouragement that the worst of the recession's job losses could be over.

The Labor Department says the rate dropped from 10 percent the previous month because it revised the total payrolls to show there were 930,000 fewer jobs last March, while a separate survey of households found that the number of employed Americans rose by 541,000.

The Obama administration pointed to the encouraging news but was careful not to appear too optimistic.

"Even as today's numbers contain signs of the beginning of recovery, they are also a reminder of how far we still have to go to return the economy to robust health and full employment," Christina Romer, the chair of the White House Council of Economic Advisers, said. "Indeed, with the benchmark revision announced today, we now know that the total job loss over the recession was more than 1 million larger than previously estimated."

The department also revised its estimates for April through October 2009, adding an additional 433,000 job losses. November was revised up, however, to show a gain of 64,000 jobs. In total, the government now says the worst downturn since the Great Depression has eliminated 8.4 million jobs.

The figure for discouraged workers and those working part-time but want full-time work also dropped to 16.5 percent from 17.3 percent in December.

Even with the revised data confusing the picture, Brian Wesbury, chief economist at Chicago-based First Trust, says the report is encouraging, with household employment up along with increased productivity. "People are working harder and earning more and to my mind that means the economy is entering a self-sustaining recovery," Wesbury told NPR.

But other economists were less optimistic. Peter Morici, a University of Maryland economist, told NPR that while the numbers were consistent with a moderate recovery, they were largely accounted for in the revised data.

"The actual unemployment in the economy did not go down, it's just the data was revised," he said. "When you have a revision in the data like this, you really have to wait until next month, at least, to get a clear picture of what's going on."

Morici said the data were encouraging enough, however, to push the risk of a double-dip recession down to 1 in 3 or even 1 in 4.

January marks one year since the economy saw the biggest one-month drop in employment, which set a six-decade record. A whopping 779,000 jobs were cut in January 2009.

The manufacturing sector added jobs for the first time since January 2007. Its gain of 11,000 jobs was the most since April 2006.

Retailers added 42,100 jobs, the most since November 2007, before the recession began. Temporary-help services gained 52,000 jobs, the fourth month of gains. Temp work often presages new full-time hiring because employers generally bring on such workers when conditions begin to improve but before they feel confident enough to add regular workers.

The average workweek also increased to 33.3 hours, from 33.2. That indicates employers are increasing hours for their current workers, a step that usually precedes new hiring.

"We have now reached the point where we cannot increase our output without adding new jobs," Wesbury said.

The construction industry lost the most jobs of any sector, dropping 75,000. Most of that loss came from the commercial building sector, the Labor Department said.

President Obama is pushing new measures to stimulate job growth, announcing in his State of the Union last month a $5,000 tax break for each new worker hired.

After meeting with small business owners in Maryland on Friday, the president said he also wants to use money returned to the government from bailed out banks to provide more credit for small businesses.

"If there are additional ideas from either party, I'm happy to consider them as well," Obama told the group. "But what I hope, what I strongly urge, is that we work quickly, and we work together, to get this done."

The president is expected to meet on Tuesday with top lawmakers from both parties to discuss jobs legislation.

NPR staff contributed to this story, which also includes wire service reports



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