【Jan. jobless rate falls to 9.7%, lowest since Aug.】

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Economic Report

Feb. 5, 2010, 8:43 a.m. EST


U.S. nonfarm payrolls decline 20,000
By Greg Robb, MarketWatch
WASHINGTON (MarketWatch) - By one measure the labor market showed signs of healing in January, the Labor Department reported Friday.

The unemployment rate fell to 9.7% in January from 10% in December, the government said.

Economists surveyed by MarketWatch had expected the unemployment rate to remain steady in double-digits.

In the survey of households used to figure the unemployment rate, the government reported employment rose by 511,000, while unemployment fell by 430,000. The labor force rose by 11,000.

These were the factors that led to the lowest unemployment rate since August.

In a separate survey of business establishments, the U.S. economy lost 20,000 nonfarm jobs in January.

This was worse than expected. Economists surveyed by MarketWatch were forecasting payrolls to rise 25,000.

But the payroll data includes benchmark revisions and other special factors that may make it less of a reliable indicator this month.

One special factor was temporary hiring by the federal government for the 2010 Census. In January, 9,000 workers were hired.

In January, job losses continued for construction and in transportation. A positive sign was that temporary service employment increased.

Employment in the manufacturing sector increased for the first month since January 2007.

In another sign of some healing, an alternative gauge of unemployment, which includes discouraged workers and those forced to work part-time, fell to 16.5% in January from 17.3% in December.

Despite the signs of improvement, the official data also reflects that this recession has been the worst in terms of job losses since the end of World War II.

Under the revisions released Friday, job losses since the start of the recession in December 2007 totaled 8.4 million. This was in line with expectations.

The economy lost 4.8 million jobs in 2009.

Average hourly earnings increased 5 cents, or 0.3% to $18.89. Economists had been expecting a 0.2% gain.

This is a new measure that includes all workers. Earnings are up 2% in the past year. The average workweek rose six minutes to 33.9 hours