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The Honolulu Advertiser
Posted on: Saturday, February 6, 2010

Dip in jobless unexpected


By Jeannine Aversa and Christopher S. Rugaber
Associated Press

Hawaii news photo - The Honolulu Advertiser

Job seekers lined up to register at a City of Miami job fair last month. A report yesterday showed the first drop in seven months in the U.S. unemployment rate.

ASSOCIATED PRESS FILE PHOTO | January 2010

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WASHINGTON The job market is lurching toward improvement. It just has a long way to go.

The outlook for jobs became a bit less bleak yesterday when the government released January's unemployment rate showing an unexpected decline from 10 percent to 9.7 percent. It was the first drop in seven months.

Still, the government now estimates 8.4 million jobs vanished in the Great Recession. And economists say the nation will be lucky to get back 1.5 million of them this year. They also warn it will take until the middle of the decade for the job market to return to normal.

The economy is growing, and normally job creation would be strengthening. But the job market is weighed down by employers who remain slow to hire because consumers are not spending enough. Companies worry about their prospects once government stimulus aid fades. They also fret about possibly higher costs related to taxes or health care measures from Congress and statehouses.

The unemployment rate fell to its lowest level since August because a Labor Department survey of households found a sharp rise in the number of Americans with jobs. The survey found that 541,000 more Americans had jobs last month.

But those gains resulted from seasonal adjustments to the data. Without those adjustments, the data show fewer people had jobs last month.

Such adjustments are made each month and are especially large in January because of heavy seasonal changes in hiring, including holiday-season jobs, according to Tom Nardone, an assistant commissioner at the department's Bureau of Labor Statistics.

President Obama said the unexpected drop in the unemployment rate was "cause for hope but not celebration." Speaking at a small business in a Washington suburb, Obama said the figures show modest progress, but he cautioned that the data will continue to fluctuate for months.

By the White House's own forecast, the unemployment rate will average 10 percent this year, up from 9.3 percent last year, a 26-year high. By the 2012 presidential election, the jobless rate will still be elevated averaging 8.2 percent. Normal is around 5.5 percent or 6 percent.

Left behind are people like Aimee Brittain, 31, who said she cannot get employers to return her calls. She's hunting for work as a secretary after being laid off from a commercial real estate firm near her home in suburban Atlanta.

"I'm fighting against people with master's degrees for receptionist jobs," Brittain said. "I can't compete."

Seasonal adjustments tend to have a big effect on the January data. Retailers typically lay off temporary holiday-season employees. Construction firms temporarily cut jobs due to cold weather. The data are adjusted so the figures will show underlying trends.

The department uses separate surveys of households and businesses to gauge employment. The two differed this month. Households showed a jump in employment. But businesses reported 20,000 fewer jobs.

From month to month, the household survey is more volatile than the business survey, Nardone said. In December, it reported a 589,000 drop in employment. But over time, the two surveys tend to track each other: In the past 12 months, both show a net loss of about 4 million jobs.

The prospects of high unemployment heading into this year's congressional elections are a liability for Obama's Democratic Party.

This year, the monthly unemployment rate is likely to stay high and possibly creep up as more people who had left the work force see an improving economy and start looking for jobs again. The jobless rate includes only those who are looking for work.

"I'd be surprised to see the jobless rate heading down in a straight line from here," said Nigel Gault, economist at IHS Global Insight. "It will be a very, very tough labor market. You'll be battling with a lot of other people for the relatively small number of jobs that will be created."

Analysts say the economy is on the verge of creating jobs, though nowhere near enough to bring the jobless rate down much.