January Unemployment Rate Falls To 9.0%, But Job Growth Disappoints
The unemployment rate fell to 9.0 percent, yet just 36,000 jobs were added for the month of January. That jobs growth figure well short of economist's expectations. Economists surveyed by CNNMoney had expected the economy would add 149,000 jobs. They also predicted the unemployment figure would rise from 9.4 to 9.5 percent.
Said Stuart Hoffman, an economist at PNC: "It's like funhouse mirror image, although I don't know if there's anything funny about it. The unemployment rate appears to be falling much stronger than it actually is, while payroll job growth is probably stronger than it actually is -- but certainly not strong enough to suggest that drop in the unemployment rate."
Weather may have played a large role in the January figures, according to economists.
"It's a disappointing employment report, with a touch of skepticism because of the weather's impact on the overall number," said Wells Fargo chief economist John Silvia.
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 215,000 fewer jobs added in the year 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.
The Conference Board's chief economist, Bart van Ark, called the figures, "A chilling start to 2011," adding, "The U.S. labor market remains unable to catch the recovery momentum of the broader economy."
Another reason for the drop in the unemployment rate could be that people simply got discouraged and stopped looking for work. The Bureau of Labor statistics does not count jobless Americans who stop looking for work.
"It's like the unemployment rate is falling for all the wrong reasons," Hoffman said. "Who the hell can make sense of this report? It's distorted. It's definitely distorted."