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U.S. Unemployment Drops in January

The number of workers on U.S. payrolls outside the farm sector rose 143,000 in January after a decline of 156,000 in December. It was the biggest increase in payrolls since November 2000, before the 2001 recession.

The unemployment rate fell three-tenths of a percentage point from December’s 6 percent, hitting its lowest level since September.

Some economists saw Friday’s numbers as a signal that that the economy might be recovering.

“These numbers are encouraging signs that the labor market has started to stabilize,” Gary Thayer, chief economist at A.G. Edwards & Sons in St. Louis told Reuters.

“Historically, the unemployment rate peaks about the time that corporate operating earnings start to rise and companies don’t feel the same need to cut employment and we’re in that situation. So we can hope that the unemployment rate may have peaked,” he said.

Other economists cautioned that the drop in the unemployment rate was partially caused by seasonal factors since retailers hired many fewer workers than usual for the 2002 holiday season and that led to fewer layoffs of those employees in January.

“I think [Friday’s numbers are] an unwinding of the December decline. Basically, the pattern of those two months was affected by large seasonal swings,” Jade Zelnik of RBS Greenwich Capital told Reuters

“We had lighter-than-normal hiring in the retail sector before Christmas. Now, we have lighter-than-normal layoffs,” she added.

The January job growth was concentrated in stores, restaurants and bars, which added 101,000 new positions. The service sector gained 35,000 jobs during the same period, with more than half of that increase in the number of health services workers.

Manufacturing, which has most strongly felt the brunt of the poor economy, lost 16,000 jobs in January following a decline of 80,000 jobs the month before.

African-American unemployment was 10.3 percent in January, compared to 5.1 percent for whites and 7.8 percent for Hispanics.

Although the economy has been growing since the end of 2001, the recovery has yet to catch hold decisively, chiefly because businesses have yet to start spending and hiring at a healthy rate, experts say.

“The good news is the jobs market is not deteriorating further, but companies still seem to be reluctant to step up hiring,” Lynn Reaser, chief economist with Bank of America Capital Management Inc., told the Associated Press.

White House spokesman Scott McClellan said President Bush will not be satisfied until every American seeking work gets a job. “The president does believe there is more to do,” he said Friday.

Mr. Bush and his economic team, led by newly sworn-in Treasury Secretary John Snow, are urging Congress to quickly enact a $695 billion package of tax cuts they say will boost growth.

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