Jobless rate sees steady decline

Number of jobs added falls below economists’ estimate

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The good news in the U.S. Bureau of Labor Statistics report Friday showing that unemployment was down to its lowest level in more than five years was tempered by lackluster news from employers.

National unemployment declined to 6.6 percent from 6.7 percent in December, and the number of people who said they were working rose by 638,000 over December's totals -- but there was a footnote.

Data for January was based on "updated population controls," so it wasn't quite comparable to December. Without the update, the number of people listed as employed would have shrunk by 22,000. With or without the changes, the unemployment rate still would have fallen by the same amount.

Doug Handler, chief U.S. economist for IHS Global Insight in Lexington, Mass., said the household survey by the U.S. Census that determines the unemployment rate is always a more fuzzy economic indicator than the survey of employers about the hiring they've done.

That second survey, conducted by the Labor Department, painted a less optimistic picture -- showing payrolls adding 113,000 jobs, well below what economists had predicted.

Mr. Handler said the report does not present a drastic enough change to stop the Federal Reserve's plan to back off on investments meant to boost the economy. Since September 2012, the Fed has been buying $85 billion a month in Treasury bonds and mortgage-backed securities.

Jason Furman, the chairman of the White House's Council of Economic Advisers, characterized Friday's report as "another reminder of both the progress that has been made and the challenges that remain."

According to the household survey, 10.2 million people were unemployed last month with 3.6 million of them out of work for more than six months. In December, Congress let emergency unemployment compensation, which continues benefits past six months, end, and efforts to reauthorize them have not been successful. Mr. Furman said on the White House blog that has cut off benefits to 1.7 million people.

Wall Street, meanwhile, responded warmly to Friday's unemployment report.

The Dow Jones industrial average rose 165.55 points, or 1.06 percent, to close at 15,794.08. The Standard & Poor's 500 Index was up 23.59 points, or 1.33 percent, to close at 1,797.02 and the Nasdaq was up 68.74, or 1.69 percent, to close at 4,125.86.

One bright spot in the jobs report was the construction industry, in which employment grew by 48,000, the largest number of people gained in any sector for the month.

Michael Hicks, an economist at Ball State University in Muncie, Ind., found an explanation for at least a good portion of that increase: snow.

Mr. Hicks said seasonal adjustment of construction employment does not account for the amount of snow that fell in January. Many construction companies keep their equipment busy when there is a snowfall, clearing sidewalks and parking lots for businesses and residences.

"You're moving tons and tons of snow in a mall parking lot with 20 inches of snow and ice on top of it," he said. That work often involves front end loaders and planers.

The construction industry will have another boost this spring repairing the roads damaged in the harsh weather this winter but, he said, that will have a negative effect on government employment. If governments have to pay contractors to fix roads, they won't be able to hire as many employees.

Overall the report on payrolls represented the second straight month of disappointing news from employers.

Ann Belser: or 412-263-1699. First Published February 7, 2014 9:10 AM

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