Mixed report shows US loses 20,000 jobs, unemployment dips

WASHINGTON (AFP) - – The US economy lost 20,000 jobs in January while the unemployment rate fell, according to official data Friday that offered mixed signals about prospects for a sustainable recovery.

The Labor Department report, seen as one of the best indicators of economic momentum, puzzled analysts since the two surveys used offered a vastly different picture of the labor market.

The report showed the jobless rate eased to 9.7 percent from 10.0 percent in December, based on a household survey that appeared to contradict the payrolls data, but reflected in part discouraged workers leaving the labor force.

The nonfarm payrolls data fell short of expectations for a gain of 15,000 jobs that would have been a clear sign of a turnaround in the troubled labor market and overall economy after a massive stimulus effort by the government.

President Barack Obama Friday welcomed the figures, saying they were "cause for hope, but not celebration."

"Far too many of our neighbors and friends and family are still out of work," said Obama, who has proposed new measures to boost job creation on top of last year's huge economic stimulus bill.

The divergent paths for payrolls and unemployment stem from the use of two separate surveys that often provide conflicting results.

The payrolls figures, often seen as a more reliable indicator of hiring, comes from a survey of 140,000 businesses, while the jobless rate is calculated from a survey of 60,000 households.

Some analysts said the differences made it hard to interpret the data.

"The drop in the unemployment rate was particularly surprising, as it was predicated on households reporting an increase in employment," said Diane Swonk, chief economist at Mesirow Financial.

"This could be capturing the self-employed doing slightly better than they had been, but it is still puzzling."

Brookings Institution senior fellow Gary Burtless said the drop in the jobless rate was "heartening news" and "cannot be explained by a rise in the number of discouraged workers."

But Burtless added that the payroll jobs number is the employment indicator most closely watched by investors and that "it will be seen, correctly, as one more sign of the hesitating response of employers to increased demand for US goods and services."

The January report showed a loss of 60,000 jobs in the goods-producing sector -- a hefty decline of 75,000 construction jobs offset a gain of 11,000 in manufacturing and 4,000 in mining.

The services sectors added 48,000 jobs including 42,000 in retail and 44,000 in financial activities that offset losses in other segments.

The report showed the average workweek, sometimes seen as a proxy for economic activity, rose slightly to 33.3 hours from 33.2 hours. Average hourly earnings rose 0.3 percent.

"This was a mediocre report," said Dana Johnson, chief economist at Comerica Bank.

Still, Johnson said there were encouraging signs in the data including a rise in the workweek, increased income and more temporary workers hired.

"I would be surprised if we didn't see private-sector job growth in February and March that will show a sustainable expansion. It's just not visible yet," Johnson said.

Wells Fargo economist Eugenio Aleman said the significant drop in the unemployment rate, which was better than expected, is a positive factor.

"It's a very strong drop," Aleman said.

"It's good news but I don't know if it is sustainable."

Aleman said that although the figures reflected little change in the number of people working, the drop in the jobless rate "is good for the psychological aspect of the recovery."

"This can improve consumer confidence, and maybe allow consumers to spend more" to boost overall economic activity.

The figures included a revision of 2009 data, which showed about 600,000 more job losses than previously estimated. The revisions showed a loss of more than 4.8 million jobs in the year and 8.4 million since the recession began in December 2007.

For December, the data was revised to show a steep drop of 150,000 jobs instead of the 85,000 previously estimated. But November data was revised to show a gain of 64,000 jobs instead of a rise of 4,000.

Official figures last week showed the US economy roared back to life with a 5.7 percent growth pace in the fourth quarter, led by brisk business spending that offset sluggish consumer activity.

The report on gross domestic product (GDP) showed the strongest growth in six years, but economists say the figure was boosted by special factors such as inventory restocking and may not be sustained unless employment picks up.