NEW YORK (CNN/Money) - U.S. job cut announcements surged in January, a typically bad month for job cuts, according to a report Tuesday by an outplacement firm.

U.S. businesses announced 117,556 job cuts in January, up about 26 percent from 93,020 in December 2003, according to Chicago-based Challenger, Gray & Christmas, which keeps track of monthly job-cut announcements.

January's announcements were about 11 percent lower than those of January 2003, when 132,222 cuts were announced.

"We typically see higher job cuts in January as companies set into motion business plans and employment needs for the new year," John Challenger, the firm's CEO, said.

Consumer products makers led the job cutting in January, announcing 22,775 cuts -- the most for that sector since Challenger started keeping track in 1993. Financial firms announced 15,157 cuts, while retailers announced 14,016 cuts, far fewer than the 44,087 cuts announced a year ago.

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Among states, Illinois saw the most announcements, with 24,713. New York followed with 18,822, Pennsylvania had 8,757, New Jersey had 7,504 and Michigan had 7,313.

Challenger's numbers shouldn't be confused with actual tallies of layoffs. They include decisions to trim payroll by not replacing workers who leave voluntarily, offering workers early retirement or similar painless methods.

In fact, the number of new weekly claims for unemployment benefits has fallen in recent weeks to a level some economists believe is consistent with an improving labor market.

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On Friday, the Labor Department is scheduled to release data on the January unemployment rate and growth in non-farm payrolls. Economists, on average, expect unemployment to hold steady at 5.7 percent and non-farm payrolls to grow by 165,000 jobs, according to Briefing.com.

Though unemployment is typically a lagging economic indicator, the U.S. economy has enjoyed nine straight quarters of economic growth, including a growth rate of 8.2 percent in the third quarter of 2003, without significant job creation.

More than 2.3 million jobs have been lost since the labor market's peak in February 2001, and nearly 800,000 of those were lost after the declared end of the latest recession in November 2001, according to Labor Department statistics (which will be revised on Friday). That would make this recovery period the most "jobless" since World War II.

"The US economy is currently in the midst of the most profound hiring shortfall of any modern-day business cycle," Morgan Stanley economists Stephen Roach and Richard Berner wrote in a research note this weekend.

Many economists -- including Berner -- hope hiring will turn around this year, believing that businesses will be forced to hire workers to keep up with rising demand. Others -- including Roach -- aren't so sure.

Challenger is in the not-so-sure camp, suggesting offshore outsourcing and a surge of corporate mergers could keep hiring weak this year.

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"We have already seen a couple of large deals announced this year, one of which expected as many as 10,000 job cuts to take place as redundant positions are eliminated," Challenger said. "This could be a big year for such transactions."