Unemployment Rate Drops to 5.7%
The unemployment rate dropped unexpectedly to 5.7% in January, from 6.0% in December. The consensus forecast was for a rise in the unemployment rate to 6.1%.
Payrolls rose 143,000, stronger than the 68,000 expected gain. However, this was offset by a downward revision of December payrolls to a decline of 156,000 from a decline of 101,000 jobs.
Manufacturing employment fell 16,000, but services rose 143,000 (up 101,000 in retailing) and construction was up 21,000.
MMS International, an economic research outfit, says even though the payrolls figure was above expectations, it would hesitate to interpret the improvement as a change in underlying employment conditions. Instead, MMS views the rise in payrolls as normal month-to-month volatility around a level that still suggests little evidence of net hiring. The number was expected to be a relatively strong due to seasonal factors, El Nino, and a rebound following weakness in December, notes MMS.
Also, hiring over the holidays was subdued relative to the normal seasonal trend, so less employees in retailing had to be laid off in January.
The workweek rose 0.1 hour to 34.2 hours. And hourly earnings were flat, leaving the year-over-year rate at only 2.8% -- nearly an eight-year low.
S&P says that overall, the report was much stronger than expected, despite the downward revision to December. The household data were revised earlier this week, although this did not affect the unemployment rate in December, S&P notes.
From MMS International, S&P MarketScope, wires