February 9, 2010

U.S. manufacturing employment up, but construction losses continue

WASHINGTON, D.C.

The outlook for U.S. employment became a bit less bleak with January’s unexpected decline in the unemployment rate, which fell to 9.7 per cent from 10 per cent as more people said they had jobs.

Still, the Feb. 5 unemployment report showed just how deep the job crisis remains. The government now estimates 8.4 million jobs vanished in the Great Recession, and economists think the nation would be lucky to get back 1.5 million of them this year. And they say it will take at least three to four years for the job market to return to anything like normal.

A Labour Department survey of households found that 541,000 more Americans had jobs last month. But most of those gains were attributed to seasonal adjustments to the data.

Without those adjustments, which account for reduced hiring during winter, the data show fewer people had jobs last month.

The unemployment rate fell to its lowest level since August, primarily because a department survey of households found a sharp increase in the number of Americans with jobs. Analysts expected an increase to 10.1 per cent.

A separate survey of businesses found that employers shed 20,000 jobs last month.

January’s report offers hope that employers may start adding jobs soon. Excluding the beleaguered construction industry, the private sector as a whole added 63,000 positions.

Most of the 75,000 jobs lost in the construction industry came from the commercial building sector, the department said. Construction lost more jobs than other sector.

John Silvia, chief economist at Wells Fargo, said the drop in the unemployment rate wasn’t a result of a shrinking labour force, which has held the rate down in previous months.

“It simply was, people found jobs,” he said. The report is “consistent with continued improvement in the labour market.”

But Paul Ashworth, an economist at Capital Economics, noted that the economy has been growing for six months yet company payrolls are still shrinking.

“Based on what we’ve seen so far, we think it is fair to characterize this as another jobless recovery,” Ashworth said.

The employment figure for November was revised higher to show a gain of 64,000 jobs, up from 4,000. But the December figure was revised lower, cancelling out the gain.

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.

Associated Press

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