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Unemployment Rate Drops As Jobs Added
February 6, 2004
WASHINGTON — The nation's unemployment rate dropped to 5.6% in January to the lowest level in more than two years as companies added 112,000 new jobs, providing fresh signs the prolonged hiring slump may be ending.
The jobless rate fell 0.1 percentage point last month to the lowest level since October 2001, when it was 5.4%, the Labor Department said Friday. January's rate matched the 5.6% posted in January 2002.
Employers added jobs last month at a pace not seen in three years. The last time payrolls expanded more than 112,000 was in December 2000, when companies added 124,000 jobs.
January's hiring gains marked the fifth month of increases, and followed a revised 16,000 new jobs added in December, better than the 1,000 initially reported.
The report disappointed some economists as analysts had been expecting the improving economy to create 150,000 jobs in January. They were looking for the unemployment rate to hold steady at 5.7%.
Many of the new jobs came from a 76,000 increase in the retail sector. But analysts had said before the report that a seasonal adjustment quirk would be the main reason for such a rise. They said there would be a gain because retailers took on fewer employees than expected in the holiday shopping months, which would mean there would be fewer layoffs in January.
The troubled manufacturing sector cut jobs for the 42nd month, despite some signs of a revival in factories.
The report included annual benchmark revisions, but these did not lead to a change in the overall picture.
Economists and policymakers will be closely looking at the report for evidence of an improvement in the labor market, which is seen as the key to a sustained economic recovery. The Federal Reserve is expected to keep interest rates on hold until signs of consistent job growth emerge.
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