Washington, DC, February 3, 2006--The unemployment rate fell to a 5-year low of 4.7% in January as 193,000 jobs were added to nonfarm payrolls, the Labor Department said Friday.
The January payroll figures fell short of expectations of a gain of 248,000, but with upward revisions to November and December of 81,000, the total payroll count was a bit more than expected.
"This report is much stronger than it first appears," said Ian Shepherdson, chief U.S. economist for High Frequency Economics.
"Despite the 'disappointing' headline, this is a strong report, with the theme again one of upward revisions," said analysts for Action Economics.
Payroll growth averaged 160,000 per month in 2005; it has averaged 229,000 in the past three months.
The drop in the jobless rate in January to the lowest level since April 2001 was a surprise: Economists surveyed by MarketWatch expected the unemployment rate to remain at 4.9%. See Economic Calendar.
Bond yields rose on the news, bringing the yield on the 2-year note to 4.60%, the highest in more than five years. Stock futures fell. See Indications.
The decline in the jobless rate was due to benchmark revision of the household survey at the beginning of the year. Total employment was about 300,000 higher than in December, while unemployment was about 300,000 lower at 7 million. Read the full report.
Direct comparisons between December and January are not possible because of a break in the household data series. In essence, the government lumped all the revisions for the past year into one month.
Other details of the report showed a stronger labor market.
Average hourly wages rose 7 cents or 0.4% to $16.41. Economists expected a 0.3% gain. Average hourly earnings are up 3.3% in the past year, about the same as the inflation rate.
The average work week was steady at a revised 33.8 hours. Total hours worked in the economy increased 0.2%
Payrolls in the goods-producing sectors increased by 58,000, including 46,000 in construction and 7,000 in manufacturing. It's the third increase in factory jobs in the past four months.
Payrolls in the services sector rose by 135,000 in January. Education and health care industries added 39,000 jobs; leisure and hospitality industries added 26,000. Retail jobs fell by 1,500.
Of 278 industries, 57.6% were hiring in January. Among 84 manufacturing industries, 47.6% were hiring.
