Unemployment Rate Declines To 9.7%

The U.S. unemployment rate fell to a five-month low of 9.7 percent despite employers cutting another 20,000 jobs in January, according to a government report on Friday.

The Labor Department said January Nonfarm payrolls declined 20,000 versus an estimated increase of 15,000. Nonfarm payrolls for December were revised lower to a 150,000 drop from a drop of 85,000 while November was revised upward to a gain of 64,000 from a gain of 4,000.

A positive in the report was that temporary employment increased by 52,000 in January, after an increase of 59,000 in December. Temporary employment is often seen as a leading indicator of future permanent hiring.

Another positive sign was the average work week which rose unexpectedly to 33.3 hours, the highest in a year, from 33.2 hours in December. An increase in the hours worked per week is another leading indicator of future hiring by firms.

Tempering the enthusiasm in the report was the fact that more people gave up looking for work, which helped to lower the actual unemployment rate. The number of "discouraged job workers" rose to 1.1 million in January from 734,00 a year ago.

Despite an increase in the general economy, unemployment has remained high as firms remain wary of the recovery and are reluctant to hire any workers. Concerned about the high unemployment rate and potential voter backlash this November for Democrats, President Barack Obama has declared job creation will be his top priority in 2010.