The nation’s unemployment rate plunged from 9.4 percent to 9 percent last month apparently as thousands of people decided to sit out snowstorms and suspended their search for work, the Labor Department reported Friday morning.
The big snowstorms and extremely cold weather that hit the Northeast, Midwest and other broad swaths of the country also kept employers from adding many people to payrolls during the month. Only 36,000 new jobs were created — far less than the 150,000 openings that economists had predicted.
Construction employment was hit particularly hard, plummeting by 32,000, and courier and messenger services laid off a lot of people after the Christmas holidays. But even the professional and business services sector — which is the largest source of jobs in the economy most of the time — generated only 31,000 last month, about half the recent pace of jobs gains there.
“Weather,” was the one word used by John Silvia, chief economist at Wells Fargo Securities, to explain the many surprises in last month’s jobs report.
The department estimated that bad weather kept 707,000 Americans from working during the month, more than twice the average number of absences in January of 282,000 over the past five years, he said.
But even though the weather was unusually severe, the reaction by workers and employers was surprising, since usually it prompts them to cut back on hours, not on jobs, he said.
“Weather usually hits the average workweek more than the job count since even if a worker shows up just one day they are still employed,” he said. The average workweek declined by only 0.1 hour to 34.2 hours in January while wage gains held up at just under 2 percent over the year.
The plunge in the unemployment rate, which hovered near 10 percent for most of last year, was particularly startling and was concentrated among men and Hispanics. It was the second month in a row for such a large drop, and suggests that thousands of people are simply giving up their search for work and leaving the labor force.
Revisions published by the department show that overall about 452,000 fewer people had jobs at the end of last than previously estimated.
Heidi Shierholz, an economist for the Economic Policy Institute, said the overall report was “muddled” by last month’s extreme weather, but said the downward revision in the number of jobs generated by the economy last year provided a dismal footnote to the already depressing and historic job losses recorded during the recession.
“One thing is crystal clear: The U.S. labor market started 2011 with half a million fewer jobs than it had 11 years ago,” Ms. Shierholz said. That points to the “enormity of the current labor market crisis,” she said.
The report seemed to dash hopes among many analysts that the job market would start to pick up after signs that the broader economic recovery accelerated at the turn of the year.
“Given the confounding nature of this report, we will have to wait at least another month to see if the labor market is rebounding strongly,” Ms. Shierholz said.