Unemployment Rate Drops to 9% and 36,000 Jobs Created in January

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Researched by Industrial Info Resources (Sugar Land, Texas)--The national unemployment rate continued the downward trend begun in December of 2010 by dropping another 0.4% to 9% in January. This two-month decline of 0.8% is the steepest two-month drop in the unemployment rate in close to 53 years. However, only 36,000 new jobs were created in January. In the past three months, an average of 128,000 new jobs have been created each month, slightly over the 125,000 jobs that must be created each month to keep pace with normal population growth and about half the amount needed to see a significant decline in the unemployment rate.

Significant declines were seen in the construction sector, which lost 32,000 jobs, and the transportation and warehousing sector, which lost 38,000 jobs in January. Neither of these declines was entirely unexpected, as transportation and warehousing firms had hired significant numbers of extra employees to handle the holiday rush at the end of last year and harsh weather has inhibited construction efforts across much of the U.S. in the past month. Among the construction losses, the nonresidential specialty contractors sector saw 22,000 jobs lost during the month, and the buildings construction sector dropped an additional 10,000.

However, there were also some positive areas of growth. The manufacturing sector saw 49,000 new jobs created in the month, while the motor vehicles and parts sector added 20,400 new jobs. The fabricated metal products sector and the machinery sector also saw growth, adding a total of 23,000 jobs between them. The retail trade added 27,500 jobs, with the professional and business services sector contributing 31,000 jobs, and the education and health services sector adding 13,000 jobs. Overall, the unemployment rate dropped, thanks to the Labor Department's household survey indicating more than 500,000 people formerly without work found jobs during the month. However that survey is separate from the Bureau of Labor Statistic's survey, which showed slow jobs growth.

Spending in the United States has continued to trend upwards in recent months and this is likely to continue throughout the balance of 2011. The increases in spending, coupled with the gradual increase in capacity utilization at existing plants will eventually lead to larger manufacturing jobs gains in the coming months. However, the growth in this area is expected to be steady but slow throughout 2011. Companies have been taking a very cautious approach to hiring as the recession has wound down and are not likely to go on a hiring spree in the foreseeable future. While the unemployment situation will certainly continue to improve it will be at least 2012 before the country see's unemployment rates approaching those of pre-recession levels.

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