The unemployment rate fell sharply last month to 9 percent, the lowest since April 2009, based on a government survey that found that more than a half-million people found work.
A separate survey of company payrolls showed a scant increase of 36,000 net jobs as snowstorms likely hampered hiring. That survey doesn't count the self-employed.
John Challenger, with the outplacement firm Challenger, Gray & Christmas, said the drop in the unemployment rate was "a real sign perhaps that more people are self-employed and more are working that aren't" reflected in the business payroll survey.
Snow Hurts Payrolls But Factories Up Sharply
Harsh snowstorms last month 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.
Private analysts had expected employers to add 146,000 jobs and the unemployment rate to rise to 9.5 percent.
In one bright spot, manufacturing added 49,000 jobs, the most since August 1998. And retailers added 28,000 jobs, the largest number in a year.
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.
Obama Adviser: Jobless Rate Still 'Unacceptably High'
White House economic adviser Austan Goolsbee said in a statement that the economic data has been encouraging in recent months, "but there is still considerable work to do."
"The 0.8 percentage point decline in the unemployment rate over the past two months is a welcome development; however, the rate remains unacceptably high," he said.
The number of people unemployed fell by more than 600,000 in January to 13.9 million. That's still about double the total that were out of work before the recession began in December 2007.
Revisions Cut 2010 Job Growth
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.
In the past three months, the economy generated an average of 83,000 net jobs per month. That's not enough to keep up with population growth.
The weakness in hiring was widespread. Restaurants and hotels cut 2,200 jobs. Governments shed 14,000 positions. And temporary help agencies eliminated 11,000 jobs. Financial services lost 10,000 positions.
Education and health care services, one of the few steady job generators through the downturn, added 13,000 jobs, the fewest in almost two years. Financial services lost 10,000 jobs.