Page last updated at 15:58 GMT, Friday, 5 February 2010

US unemployment shows a surprise decline

Te Ramos is a 60-year-old former construction worker who is now dependent on free food pantries and a soup kitchen.

The US unemployment rate unexpectedly fell in January, to its lowest level in five months, official figures from the Labor Department have shown.

Last month's rate was 9.7%, down from 10% in December.

Yet at the same time, US employers cut 20,000 jobs in January, which was also unexpected. Most analysts had predicted the economy to add jobs.

President Barack Obama has declared that job creation would be his top priority for 2010.

Last month's job losses were the lowest since the US recession started, with the exception of November 2009 when a surprise rise in employment was seen.

"While unemployment remains a severe problem, today's employment report contains encouraging signs of gradual labour market healing," said White House economic adviser Christina Romer.

Contradicting data

The 20,000 job losses in January also compares with 779,000 losses for the same month last year.

Analysts had expected the jobless rate to rise to 10.1% last month, and 5,000 net new jobs to be created.

Although overall, employers cut more jobs than they created, there were some sectors that performed well.

Manufacturing added 11,000 new jobs in January, its best performance since April 2009.

Meanwhile, retailers created 42,100 new jobs, the most since November 2007.

The apparent contradiction between the unemployment rate falling, and US employers cutting jobs in January can be explained by the fact the data comes from two different surveys.

The unemployment rate data looks at households, while the job creation figures come from companies.



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