Jobs report a muddled picture

WASHINGTON — Job creation came nearly to a halt in January, yet the unemployment rate fell to 9 percent, according to a new report that gives a muddled picture of the state of the labor market.

Employers added 36,000 jobs last month, the Labor Department said Friday, far fewer than the 145,000 economists had forecast and the weakest month of job creation since September. The surprisingly low numbers suggested that last month's snowstorms probably kept people from looking for work.

The unemployment rate fell to 9 percent from 9.4 percent, the second straight month of decline, as the number of people describing themselves as employed rose by 589,000. The jobless rate was 9.8 percent in November, and economists thought it would take until the end of this year to decline to 9 percent. Instead, it reached that level the first month of the year.

The two numbers are based on separate surveys — of employers for the job growth data and households for the unemployment rate — but usually show similar trends over time. That made the January report a mystifying blend of mixed signals. Economists were expecting the opposite outcome: for job creation to accelerate as the economy strengthened, and for the jobless rate to climb as unemployed workers started looking for work again.

"The drop in the unemployment rate is actually very encouraging," said Paul Ashworth, chief U.S. economist at Capital Economics, while attributing the weak job creation number largely to weather.

Gary Burtless, a senior fellow at the Brookings Institution, said the report "offers a puzzling and mixed picture of the health of the current job market . . . in the past couple of months."

Accounting for the weather and a passel of statistical adjustments that affected the January data, the picture that emerges is this: The job market isn't nearly as positive as implied by the steep drop in unemployment. But it's not nearly as discouraging as the weak job growth suggests. It will take an additional month or two of reports to discern the underlying trajectory of the labor market.

The lower jobless rate requires some statistical parsing. The Bureau of Labor Statistics, as it does every January, updated its estimate of the U.S. population. This year, the bureau estimated that the population fell by 347,000, which caused the proportion of people working to accelerate more than it would have if the population estimate had remained steady.

In theory, a job should not disappear from payrolls because a snowed-in employee can't make it to work for a few days. But employers don't always fill out surveys correctly, and steep declines in employment are frequently reported in months with severe weather. Some 886,000 Americans were unable to work the week of the survey, many more than the 417,000 kept from work by bad weather during a typical January.

The White House called the decline in the jobless rate a "welcome development" but generally refrained from celebrating the numbers, given the uneven picture they paint.

"The overall trajectory of the economy has improved dramatically over the past two years, but there will surely be bumps in the road ahead," White House Council of Economic Advisers Chairman Austan Goolsbee said in a statement. "The monthly employment and unemployment numbers are volatile, and . . . estimates are subject to substantial revision. . . . It is important not to read too much into any one monthly report."

House Speaker John Boehner, R-Ohio, however, said the weak job creation shows that the Obama administration's push to speed the economic recovery isn't working.

"The spending binge is hurting job creation," Boehner said in a statement, "eroding confidence, draining funds away from private investment and spreading uncertainty among job creators."

If analysts are correct that the weak job creation was driven more by weather than by a fundamental softness in the economy, a bounce-back effect should show stronger job growth in February and March.

In one promising sign, the number of people working part time but who want full-time work and those who have given up looking for a job out of frustration fell to 16.1 percent, from 16.7 percent in December.

The survey of households also captures people who are self-employed and who work in agriculture. The data from employers, on which job creation statistics are based, do not include those figures.

On Thursday, Federal Reserve Chairman Ben Bernanke said that although he expects economic growth to strengthen this year, "until we see a sustained period of stronger job creation, we cannot consider the recovery to be truly established."

The January report is likely to do little to lead the Fed to reconsider its policies of keeping interest rates very low while buying Treasury bonds to encourage growth.