Employment rose far less than expected in January, partly the result of severe snow storms that slammed large parts of the nation, but the unemployment rate fell to its lowest level since April 2009.
Nonfarm payrolls grew just 36,000, the Labor Department said on Friday, far less than the 145,000 increase that economists had expected.
The government noted that severe weather could have affected construction payrolls, which dropped 32,000 last month. There were also large declines in the employment of couriers and messengers.
My view is that the storms interrupted the hiring process. They have not diminished the demand for labor, but made it that much more difficult for both the job seekers and employers to consummate the hiring transaction, said Patrick O'Keefe, head of economic research at J.H. Cohn in Roseland, New Jersey, before the data was released.
The modest jobs gains are at odds with other data for January, which had suggested employment growth was picking up and had raised hopes that the manufacturing-driven recovery was now spreading to other sectors of the economy.
Despite the small increase in payrolls, the jobless rate, which is calculated from a separate survey, fell to 9.0 percent from 9.4 percent in December. The decline is unlikely to discourage the Federal Reserve from completing its $600 billion government bond-buying program to support the economy.
The government revised November and December payrolls to show 40,000 more jobs created that previously estimated.
The labor market has lagged the broader economy, which grew at a 3.2 percent annual rate in the fourth quarter. Fed Chairman Ben Bernanke on Thursday acknowledged the pick-up in the recovery, but said it will be several years before the unemployment rate has returned to a more normal level.
The payrolls data comes from a survey of businesses, while the jobless rate is determined by a survey of households. The January household survey also reflects population changes, which makes it difficult to determine why the jobless rate fell.
A department official also said 886,000 people in the survey said they did not work in January because of severe weather.
The Labor Department also finalized its annual benchmark revisions to its payroll series, which showed the level of employment for March 2010 was revised down by 378,000.
Last month, the private services sector added only 32,000 jobs after increasing 146,000 in December. The sector accounts for more than 80 percent of jobs in the United States.
Payroll increases in goods-producing sectors rose 18,000, as manufacturing employment grew 49,000, the largest increase August 1998, after rising 14,000 in December.
Government payrolls dropped 14,000 in January, marking a third straight month of declines, pulled down state and local governments.
(Reporting by Lucia Mutikani; Editing by Neil Stempleman)