Economy sheds jobs in January

Non-farm payrolls unexpectedly tumbled into decline in January, as the economy lost 17k jobs. This was the first outright decline in combined private sector and government sector job growth in over four years. The market had been looking for a gain of 70k. Last month's anemic growth was revised higher to 82k from the originally reported 18k figure. The unemployment rate did ease back slightly to 4.925% after jumping +.3% last month to 5%. Big picture, it is clear that job growth has slowed dramatically. Manufacturing employment fell -28k MoM, the largest decline since last August. Large declines were seen in goods-producing jobs, which fell by -51k, and construction, which lost another 27k jobs. Business services had its first job losses in many months, falling -11k MoM after rising 70k in December. Government jobs also tumbled for the first time in 6 months, shedding -18k jobs. The largest job gains in January were in leisure and hospitality at +19k and retail trade at +11k. But both these figures are subject to question, due to the fact that the seasonal might be overestimating growth because fewer people were added last fall, so fewer were laid off this winter in these categories as businesses were hesitant to expand due to the weak economy. In total, service industries added 34k jobs in January versus expanding by 143k in December. Average weekly earnings fell -.1% MoM, as the aggregate hours worked fell -.3% MoM. Hours worked eased back to 33.7 from 33.8, where it has been since July. The manufacturing workweek held steady at 41.1 hours with overtime holding constant at 4 hours, down from 4.2 hours in September. Over the past year, average hourly earnings have risen +3.7% YoY and average weekly earnings have grown +3.4% YoY. The Labor Department announced its annual revisions, based on tax data, to adjust seasonal data for the past year. The revision subtracted 376k jobs from what was originally reported as job growth for 2007. This means the economy added 1.137 million jobs last year, or an average of 95k jobs a month. This is below the growth in the work force, which is estimated to add 120-150k new workers each month. So, it is not surprising the unemployment rate is rising.