Weak Job Growth Attributed to Bad Weather

By Toni Vranjes

February 4, 2011

At first glance, the January employment report doesn’t seem to make much sense. But if you dig deeper, you can find some explanations.

The payroll survey showed that employers created only 36,000 new jobs, which was far fewer than economists had expected. But the unemployment rate — which is based on a separate measure called the household survey — plunged from 9.4 percent to 9 percent.

In January, the construction industry shed 32,000 jobs, and employment in transportation and warehousing fell by 38,000. Meanwhile, manufacturing gained 49,000 jobs, and retail trade added 28,000 positions.

Harsh weather likely contributed to the disappointing payroll numbers, according to Nigel Gault, chief U.S. economist for IHS Global Insight. Severe storms last month forced employees in some parts of the country to miss work. If those workers missed the entire pay period that included the 12th of the month — and didn’t get paid as a result — then they were excluded from the payroll-employment figures.

Unlike the payroll survey, the household survey counts these workers as employed. Because the payroll survey was distorted by the weather last month, the household survey offers a clearer picture of the state of the job market, according to Gault.

And the findings are encouraging, he adds. The household survey showed that the number of employed people increased by 589,000, while the number of people in the labor force remained unchanged. In short, the steep drop in the jobless rate reflects the fact that more people are finding jobs, Gault says.

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