Last Friday's US January unemployment report painted a mixed picture for the US labor market. Headline unemployment unexpectedly declined by 0.3% to 9.7% and US employers shed another 20k jobs. Economists had expected a modest uptick in unemployment with a slight rise in nonfarm payrolls growth. The January unemployment report confirms that the rate of job loss has slowed but also indicates that there is limited new job creation. Headline unemployment is at its lowest level since August of last year but the decline in unemployment rate most likely reflects the impact of workers who have decided to stop seeking employment. 14.8mln people remain out of work and the government reported that additional 600k lost their jobs since the start of 2009 than had been originally reported with total job losses of 4.8mln in 2009. The total loss of jobs since the start of the recession in December 2007 is 8.4mln. There were some bright spots in the January employment report with 48k in manufacturing and service jobs created during the month and 52k temporary workers hired. Jobs however remain difficult to find and the US may still face a jobless recovery. The number of job seekers to available jobs has fallen to 5.9 from 6.4 last month. This is first time that the job seekers to jobs ratio dipped below 6 since last June. The pre-recession level of job seekers to jobs ratio was 1.7.

Many analysts expect the US nonfarm payrolls to soon turn positive. In order for this to happen jobless claims will need to start falling again. Recent improvement in jobless claims data has slowed. Last week's initial jobless claims report posted an unexpected rise of 10k. Economists estimate that 125k jobs must be created each month to keep up with nations expanding labor force and population growth. The number of long-term unemployed persons, those out of work for 27 weeks or more rose to 6.3mln in January with the average duration of unemployment at 30.2 weeks. Despite US Q4 GDP expanding at its fastest rate in six years and manufacturing and service PMI's at their best levels in four years, the recovery has failed to produce any significant jobs creation. Jobless claims for week ending 02/06 will be released on Thursday February 11th at 8:30 am EST and are expected at 465K compared to 480k last month. The trade will be looking at Thursday's US jobless claims report for clues to whether new jobs are being created.

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