Economic Report: Jobless rate falls to lowest level since August

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.

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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.

Economists said it was possible that the unemployment rate peaked at 10.1% in October.

Immediately after the report was released, Wall Street stock futures pared losses, and futures added to bets that the Fed would hike rates. The dollar cut its gains.

But in a separate survey of business establishments, the U.S. economy lost 20,000 nonfarm jobs in January. Read full government data.

This was worse than expected. Economists surveyed by MarketWatch were forecasting payrolls to rise 25,000. Read forecast of all major U.S. indicators

But the payroll data include benchmark revisions and other special factors that may make them a less 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.

The department said 35,000 jobs were lost on average over the past three months. This is a much slower pace than the 103,000-per-month average in the three months ended in December online cash advance.

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.

In addition, the number of persons working part time who would have preferred full-time employment dropped to 8.3 million in January from 9.2 million in December. This is the lowest level in a year.

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

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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. See data preview: Massive revision will show recession was even worse

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.

Within the goods-producing industries, manufacturing added 11,000 jobs. The manufacturing workweek rose 18 minutes to 39.9 hours and factory overtime increased.

Retail companies increased payrolls by 42,000 in January. Professional and business services gained 44,000 jobs, mostly in temporary help positions.

Government lost 8,000 jobs despite the gain in census workers.

Economic Report: Jobless rate falls to lowest level since August

03:36 - 2010-Feb-5