THE US unemployment rate fell to a five-month low of 9.7 per cent in January, even as the economy shed 20,000 jobs, according to a government report that contained conflicting signals on the health of the country’s labour market.
The mixed jobs data were released amid continued turbulence in global markets. European stock markets fell sharply as fears about sovereign defaults in the euro zone savaged sentiment for a second day in a row.
Commodities and emerging markets also retreated amid unease about the mounting debt burden in many large economies.
The dip in the US unemployment rate from 10 per cent to 9.7 per cent was unexpected and will lift hopes that businesses are beginning to hire again.
Democrats in Washington highlighted the decline as evidence that the administration’s efforts to bolster the economy were paying off, while Republicans focused on the lack of job creation as proof those policies were not working.
“We are climbing out of the huge hole we found ourselves in,” US president Barack Obama said yesterday. “These numbers are a cause for hope, but not celebration.”
More than half a million Americans found work, the Labour department report said, helping push the jobless rate to the lowest since August. A separate survey of employers showed payrolls declined by 20,000 as construction companies and state and local governments cut back.
Manufacturers hired more workers for the first time in three years, expanded hours and boosted pay, which may lift consumer spending and sustain growth. Revisions to previous data increased the number of jobs lost in the recession to 8.4 million, adding impetus to Mr Obama’s push for fresh government measures to boost employment.
“Companies just can’t meet demand requirements with their existing labour force, so they have to increase the number of workers,” said Carl Riccadonna, a senior US economist at Deutsche Bank Securities in New York.
The survey of households showed employment increased by 541,000 workers last month and the number of people in the labour force rose. The gain brought the participation rate, or the share of the population in the workforce, up to 64.7 per cent from 64.6 per cent. Labour secretary Hilda Solis called the decline in the unemployment rate a sign of “very cautious confidence”. “It’s still unacceptably high and we’re going to continue to work on that,” Ms Solis said.
“The long winter of this Great Recession seems to be drawing to a close,” said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd in New York. – (Financial Times service, Bloomberg)
