Our Terms of Service and Privacy Policy have changed.

By continuing to use this site, you are agreeing to the new Privacy Policy and Terms of Service.

January jobs report disappoints

chart_jobs_110204.top.gif By Annalyn Censky, staff reporter


NEW YORK (CNNMoney) -- Winter weather kept job seekers home and offices closed in January, getting the year off to a disappointing start, while the unemployment rate took a surprising tumble.

The economy added just 36,000 jobs in January, falling far short of expectations. Meanwhile, the unemployment rate unexpectedly sunk to 9%, down from 9.4% the month before.

Economists surveyed by CNNMoney were expecting the economy to add 149,000 jobs during the month, and the unemployment rate to rise to 9.5%.

After the report was released, economists weren't quite sure what to make of the numbers, and used a mix of colorful adjectives like "lousy," "mysterious," and "confounding."

But one thing was clear -- weather played a large role in January.

"It's a disappointing employment report, with a touch of skepticism because of the weather's impact on the overall number," said John Silvia, chief economist with Wells Fargo.

Major storms across large swaths of the country had a huge impact on businesses. According to the Labor Department's household survey, which calculates the unemployment rate, severe winter weather kept 886,000 people from going to work during the week of January 9.

All those snow days kept a lot of companies from hiring, said economist John Canally with LPL Financial. It's possible that nasty weather could have reduced the overall payroll number by about 100,000, he said.

The Labor Department also announced that job growth last year was weaker than originally stated. After 2010 revisions, there were about 900,000 jobs created during the year -- 215,000 fewer than previously reported.

The labor market typically needs at least 300,000 job gains each month to make a difference in the unemployment rate, economists say, and at least 150,000 to keep pace with population growth.

Headed in the right direction?

While the sluggish growth to payrolls was disappointing, the drop in unemployment was interpreted in different ways.

Some economists thought it was a result of people dropping out of the labor force, though others pointed to a once-a-year population adjustment based on census data that skewed the numbers.

Almost all of the drop was due to unemployed people finding jobs again, said Zach Pandl, an economist with Nomura Securities.

"This part of the report deserves a positive interpretation," he said.

Overall, the unemployment rate has had its largest two-month decline since 1958, he said.

The two parts of the report sometimes differ, because they're derived from separate surveys. While the payroll number stems from a survey of employers, the unemployment rate comes from a different survey of American households.

Canally said he expects the job market to show a spike in payrolls in February, and then resume a gradually improving trend. Any improvements though, are still likely to be at a very slow pace.

"People should not be too fearful of losing a job they have," Canally said. "But if they don't already have a job, it's still tough. Companies are still reluctant to hire." To top of page

Index Last Change % Change
Dow 18,228.30 133.47 0.74%
Nasdaq 5,305.71 0.00 0.00%
S&P 500 2,159.93 13.83 0.64%
Treasuries 1.56 -0.03 -2.08%
Data as of 3:30am ET
Company Price Change % Change
Chesapeake Energy Co... 6.23 -0.39 -5.89%
Bank of America Corp... 15.29 0.20 1.33%
Procter & Gamble Co 88.36 0.51 0.58%
Ford Motor Co 11.98 -0.03 -0.25%
Micron Technology In... 18.00 0.64 3.69%
Data as of Sep 27
Sponsors

Sections

Wells Fargo executive Carrie Tolstedt could still walk away from the bank with $77 million in stocks and options, despite new efforts by the bank to curb her controversial pay. More

Despite attacks from Republicans including Donald Trump, the Federal Reserve is a big money maker for U.S. government. More

SpaceX CEO Elon Musk laid out his plan to put humans on Mars to eventually form a self-sustaining colony. More

Low interest rates have pushed some housing markets around the world into bubble-risk territory, according to a new report out of UBS. More