U.S. Unemployment Falls, But New Jobs Lag

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WATCH Business Report (02.03.11)

The U.S. economy added 36,000 jobs in January, far fewer than economists had expected because of severe weather, but the unemployment rate fell to a two-year low of 9 percent.

Economists had expected at least 146,000 new jobs last month, so the numbers reported Friday by the U.S. Department of Labor painted a mixed picture of the economy, which has struggled for more than two years. Snow and ice storms in many parts of the country likely cut employment in construction and other industries, the labor department said.

The Labor Department's household survey determined that more than a half-million people without jobs found work. But there are still 13.9 million people who are unemployed.

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Kelley Briggs, 50, from Cumberland, R.I., was laid off in the same week more than two years ago as her husband. Both have since been in and out of jobs, and she had a 19-month period with no employment.

"It was frightening in that we didn't know how the future was going to go financially. It was frustrating because no matter how many times we applied for things, we didn't get anything. I couldn't even get interviews," she told ABC News. "I just think there was so many people looking. I don't think it was my age, but nobody will ever say that because of legal implications."

The labor department said harsh snowstorms last month cut into construction employment, which fell by 32,000, the most since May. A 45,000 drop in messengers and couriers cut that industry's employment by 8 percent. In one bright spot, manufacturing added 49,000 jobs, the most since August 1998. Some economists had expected unemployment to rise from December's 9.4 percent, making the surprise drop another bit of good news.

Richard Fuka, 50, has owned his own fishing business in East Greenwich, Rhode Island, since 1987. His boat has been idle for most of the past four years because of federal limits on each state's total allowable catch of fish.

"I would describe my business as the heart and soul of my entire life. I have had the spirit of wanting to be a fisherman since wanting to be a child.…I am so in love with my business it is beyond comprehension. It's my heart and soul and my family's life."

Fuka has managed to find other sources of income related to the fishing industry through entrepreneurship:

"I've taken the skills I've learned since I was a little boy. I've tried to get into the boat repair business to try to sustain myself while I wait for the president to answer our call for help so I can go fishing."

He has two sons in high school 13 and 16: "It has been very difficult for them, but at the same time, our household has chosen to take a proactive approach to look not at the glass half empty but glass half full. Because parents want to give everything to their children, in a painful way, they have reinvented themselves to make do.

"We have electricity and heat in the house but we keep it very simple. There have been times we have had electricity turned off, but you have to readjust and earn money to have these things," he said.

Fuka and Briggs were both featured in a multimedia website, OverFiftyAndOutofWork.com. The site, started by Susan Sipprelle, a writer and journalist, features 100 video stories of older, unemployed people from all over the country. She and her husband are continuing to document stories to improve the cultural perception of older workers and influence policy changes for the unemployed.

Friday's jobs numbers were a contrast to Wednesday, when private payroll firm Automatic Data Processing reported an increase of 187,000 jobs in January.

In recent months, ADP has shown job market acceleration that outpaces the Bureau of Labor Statistics. The 297,000 jobs the company predicted the job market would gain in December did not match the Department of Labor's subsequent 103,000 figure.

The December number was well below the 150,000 payroll additions economists were predicting based upon other economic signals. But, it was an improvement after a disappointing November when payrolls added 71,000 jobs and the unemployment rate skated up to 9.8 percent.

In November, employees continued to shop the job market for better career opportunities. It was the fourth consecutive month that more employees told their bosses "I quit" versus hearing "you're fired," according to Bureau of Labor Statistics numbers.

Some may have found better opportunities since the jobless rate in December hit a 19-month low of 9.4 percent.

On Thursday, ahead of today's jobless report, retail sales showed very modest gains and the Dow Jones industrial average and S&P 500 inched up slightly.

"The retail is sector is an important sector of the economy but, more importantly, if retail sales are up that means consumers have more confidence and they might be working more hours, people may be finding jobs," Bronars said. "Hopefully, they'll be starting a job they found. ... There are also other signals that indicate the labor market is still sluggish."

"If sales are picking up, people feel good about their financial state," said Jack Bauer, a senior economist with Manning & Napier. "It's a subtle hint that the numbers will continue to improve."

While thundersnow and other hazardous weather failed to stop shoppers, some economist predicted labor figures could be impacted by conditions. Labor figures are based on a voluntary survey and companies affected by weather conditions could be delayed in reporting.

Any weather-related downturn would only have a short-term or temporary affect, economists said.

Economists warned about the long-term job additions that are needed for real growth.

"More than 8 million jobs were lost and it's going to take a long time to get them back," Bronars said. "People are unable to find work at the pace that we would need in order to get the labor market moving.

"There's still more than 4.5 million people on extended benefits, [which are people] collecting benefits for at least six months," he said. "This may be an indication that the experience and the skills they have aren't really matching up with positions that employers are trying to fill."

According to ADP, the construction sector lost 1,000 jobs, bring its total loss since 2007 to more than 2 million jobs. Large companies such as Google may plan to add 6,000 jobs but small business has been called the engine of the economy.

"It certainly doesn't hurt for companies to announce large [job] gains, but you need the grassroots level to be beneficial for the economy," Bauer said.

The Associated Press contributed to this report.