Jobless Rate Unexpectedly Drops To 9.7 Percent The report hinted at some job market improvement, even though employers shed 20,000 jobs in January.

Jobless Rate Unexpectedly Drops To 9.7 Percent

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

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Steven Senne/AP

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