Jobless Rate Slips to 5.7% in January

The nation’s jobless rate dipped to 5.7% in January as restaurants, bars, department stores and other retailers laid off fewer temporary workers than they usually do after the winter holidays, the Labor Department reported Friday.

The government’s monthly tally showed that payroll employment increased by 143,000 last month, nearly erasing the previous month’s job loss of 156,000. It was the biggest gain in 26 months.

Economists cautioned against reading too much into the seasonally adjusted figures. Retailers hired fewer temporary workers than normal for December because they did not expect a big increase in holiday sales. On a seasonally adjusted basis, that showed up as an employment decline. In January, the reverse was true.

“There’s not a lot here to get excited about,” said Maury Harris, chief U.S. economist for UBS Warburg.

“We lost jobs in the previous month, so on balance we’re just treading water.”

Excluding the seasonal increase would leave an actual employment gain of 40,000 to 50,000, well below the level that would accompany a robust recovery, said chief economist Bill Cheney of John Hancock Financial Services.

“We’re still mired in a jobless recovery,” Cheney said.

“Unless we’re missing something, the unemployment rate will be shooting back up again very soon.”

The U.S. economy has shed 1.7 million jobs since the most recent recession began in March 2001. Last month’s decline in the jobless rate from its post-recession high of 6% in December returned the number to within the narrow range it occupied during most of 2002.

The unemployment rate never fell below 5.5% last year, even though many analysts believe an economic recovery began in late 2001.

The lowest unemployment rate in recent years was recorded in October 2000, when it was 3.9%.

The jobless rate for African Americans dropped to 10.3% in January from 11.2% the previous month; it dipped to 7.8% from 7.9% for Latinos. Unemployment among whites held steady at 5.1%. However, the Labor Department said a change in its survey methodology made the month-to-month comparisons within ethnic categories less significant.

Last month’s seasonally adjusted job gains were concentrated in the retail sector, which ended the month with 101,000 more jobs than would normally be the case after the holidays.

The biggest increase was posted by restaurants and bars, up 73,000 for the month. Miscellaneous retailers such as toy stores were ahead by 27,000, department stores by 13,000 and home improvement stores by 10,000. Hotels and other lodging places increased 15,000 on a seasonally adjusted basis.

Hospital employment and other health services, which have grown steadily through the recent economic doldrums, added 18,000 jobs last month.

Still, there were signs of continuing weakness elsewhere in the labor market. Business-services employment, including temporary help agencies, declined by 31,000, and personal services slipped by 10,000. Furniture stores lost 16,000 jobs, and car dealers 5,000.

The nation’s factories, which have eliminated 2.4 million jobs in the last five years, pared 16,000 last month.

Although the seasonal-adjustment phenomenon took some of the punch out of the January increase, it was bigger than expected by many analysts. Economists surveyed by Reuters had predicted a monthly employment gain of 70,000.

After contracting during the first nine months of 2001, the U.S. economy began growing again in the fourth quarter of that year. But the recovery has proceeded in fits and starts; growth slowed to a snail’s pace of 0.75% in the final quarter of 2002.

Many economists expect it to regain momentum during the current quarter, unless thrown for a loop by higher oil prices or war with Iraq.

Harris, of UBS Warburg, said the economy needs to expand at a sustained rate of 3.5% or better to generate meaningful job growth. He’s predicting a 2.5% growth rate for the first quarter, which is too low to bring a turnaround.

President Bush noted the unemployment decline Friday during the swearing-in ceremony of his new Treasury secretary, John W. Snow, and said he also was unimpressed by the latest numbers.

“The American economy is in its second consecutive year of growth, yet it is not growing fast enough,” Bush said. “The economy is not strong enough.”

Snow echoed that assessment. “I want to see help-wanted signs go up all across America,” he said.