U.S. loses 20,000 jobs in January, unemployment 9.7%
WASHINGTON (Reuters) - U.S. employers eliminated 20,000 jobs in January, but the unemployment rate fell to a five-month low of 9.7 percent, according to a government report Friday that suggested the job market is slowly rebounding.
The Government argued that the employment report contains some encouraging signs of a gradual "improvement in the labor market."
"Although today's figures contain signals the beginning of the recovery, are also a reminder of how much we have to move again if the economy is stronger and there is full employment," said the White House counsel Christina Romer .
The Labor Department report also showed that 150,000 jobs were eliminated in December versus the 85,000 reported preliminarily, though the November figure was revised to an increase of 64,000 jobs from 60,000 earlier.
According to annual revisions to the data records of employment, the economy has eliminated 8.4 million jobs since the start of the recession in December 2007.
Analysts polled by Reuters had expected nonfarm payrolls showed a creation of 5,000 new jobs in January and the unemployment rate were located by 10.1 percent from 10.0 percent in December.
The median forecasts of 20 experts estimated that more accurate payroll would remain unchanged.
"This shows we're seeing a slow improvement in the labor market. There are some encouraging signs in the report (...) but it was not good enough to lead to positive territory," said Boris Schlossberg, director of currency research at GFT Forex in New York.
Shares on Wall Street opened slightly higher after the data, while bond prices of Treasury debt were steady at low levels. The dollar, meanwhile, rose against the yen and the euro.
A sharp rise in the number of people who gave in their job search was the main factor behind the drop in the unemployment rate. The number of unemployed that are tired of looking for work rose sharply to 1.1 million Jan January, from 734,000 a year earlier.
With Americans increasingly nervous about the high rate of unemployment, the president Barack Obama has stated that job creation is the priority of his government in 2010.
The president's fellow Democrats fear that voters may punish the party in the November elections if the government fails to curb the high rate of unemployment.
"The economy is moving slowly and it takes time for companies to turn from where they were to where they will go," said Torsten Slok, an economist at Deutsche Bank in New York.
Analysts speculate that a decline in unemployment could lead the Federal Reserve to raise interest rates sooner than expected.
Financial markets have also been worried that the U.S. unemployment may remain high for a long time.
The country's economy grew again in the second half of 2009 and a labor market recovery is crucial to feel self-sustaining recovery bases.
While job losses in previous months were stronger than initially thought, the breakdown of the January report encourages the view that the worst part for the job market is behind us.
Last month, the service sector created 40,000 jobs after removing 96,000 working places in December. The figure includes an increase in federal government employment, partly as a result of recruitment to the 2010 Census.
The temporary help employment grew by 52,000 seats, keeping an upward trend seen last month.
Manufacturing payrolls last month grew by 11,000 workers, its first gain since January 2007. However, the construction sector remained a thorn in the recovery, losing 75,000 jobs, probably beaten by a climate too cold.
In December, for the construction sector payrolls fell by 32,000 seats.
In another sign of improvement in the labor market, the average work week rose unexpectedly to 33.3 hours, its highest level in a year, from 33.2 hours in December. The average hourly wage increased to $ 18.89, from $ 18.84 in December.
(Reporting by Lucia Mutikani)