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Economy in Brief

January Payrolls Missed Forecast, Revisions Upward
by Tom Moeller February 2, 2007

Nonfarm payrolls grew by 111,000, an increase that was short of the Consensus forecast for a 140,000 rise, but the prior two months' gains were upwardly revised by a collective 81,000.

The unemployment rate increased last month to 4.6% from 4.5%. Household employment rose just 31,000 (2.0%) following the 303,000 surge in December, while the labor force grew 199,000 (1.9% y/y). The number of individuals not in the labor force jumped 343,000 and that increase more than reversed the declines in the prior two months. As a result, the labor force participation rate fell to 66.3%.

From the establishment survey, the job gain of 111,000 was the weakest in three months. Private service sector jobs rose just 90,000 (2.0% y/y), held back by a light 4,000 (2.0% y/y) gain in financial sector jobs and an even lighter 3,000 (0.7% y/y) uptick in information services. Professional & business services employment grew 25,000 which was also down from the increases of the last two months (2.9% y/y) and temporary help services jobs rose 5,700 (1.0% y/y) while jobs in retail trade rose just 4,000 (-0.2% y/y).

Factory sector payrolls fell again. The 16,000 worker decline was the seventh down month in a row.

Warmer temperatures helped construction employment to rise by 22,000 (1.3% y/y) and the prior month's decline was revised to a 10,00 gain.

Government payrolls increased 14,000 (1.3% y/y) but the prior month's gain was revised down.

Average hourly earnings halved December's gain with a 0.2% increase. Factory sector earnings fell 0.5% (+1.7% y/y) after an upwardly revised 1.0% December gain.

Employment January December Y/Y 2006 2005 2004
Payroll Employment 111,000 206,000 1.6% 1.9% 1.7% 1.1%
  Manufacturing -16,000 -18,000 -0.8% -0.2% -0.6% -1.3%
Average Weekly Hours 33.8 33.9 33.8 (Jan. '06) 33.8 33.8 33.7
Average Hourly Earnings 0.2% 0.4% 4.0% 3.9% 2.8% 2.1%
Unemployment Rate 4.6% 4.5% 4.7% (Jan. '06) 4.6% 5.1% 5.5%
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