I am at this conference today, so I won't be able to say much about the employment report: As Brad DeLong notes, unemployment fell to 9.7%, and payroll employment fell by 20,000:
Unemployment Rate Down by 0.3% to 9.7%, by Brad DeLong: Payroll unemployment down by 20K.
Looking like another 4% or more productivity growth quarter, and perhaps a labor market improving by the equinox.
How is it that both employment and unemployment fell?:
Jobs Are Up! I Mean Down! Whatever … , by Paul Krugman: A confusing employment report this morning: employment down, but unemployment also down. Nor is this a story about workers dropping out of the labor force; the report shows an increase in the employment-population ratio, the percentage of adults who are working. What?
OK, the trick is that there are two different surveys. Payroll numbers come from a survey of firms; unemployment (and employment-population) numbers come from a survey of households. Both surveys are subject to error, both strict statistical sampling error and things like incomplete coverage, uncertain seasonal adjustments, and so on. When employment growth is near zero, on either side, it’s not that surprising that the surveys should point in opposite directions.
The bottom line is that economic numbers are no more than rough indicators. You have been warned.
Ton Bozzo digs deeper into the numbers:
Back to Zero, by Tom Bozzo: The unexpected drop in the unemployment rate for January made me more than usually curious about the household survey results, and things there actually look OK for a change. The flat unemployment rate between November and December '09 was the less-than-virtuous result of declining labor force participation pacing the decline in employment. This month's decline in the unemployment rate reflects increasing labor-force participation and employment-to-population ratios; unemployment levels and underemployment rates  are also down. The unemployment decline appears to be statistically significant based on the BLS's (inexact) guidance on sampling variability in household survey estimates.
The headline employment figure, in contrast, is not a statistically (or qualitatively) significant result, hence the summary's "essentially unchanged" language. The everlovin' net birth-death model is subtracting more jobs this month than it did in January '09 — -427,000 jobs vs. -356,000 a year ago — so if we're actually at a turning point expect this adjustment to be a drag on measured employment. The mild upturn in manufacturing employment follows other strong data from that sector, and it's also not unexpected to see temporary employment accounting for the measured service sector growth.
Brad DeLong has been scratching his head over seasonal adjustment to the unemployment claims series; I'm wondering about what's showing up as a December employment dip. The not-seasonally-adjusted data usually features a small November-to-December drop. Last year's -538,000 was less than in '08 (around -1 million) but more than previous years. A December dip after a strong November doesn't feel right, so go figure.
Calculated Risk has graphs and more discussion.
Note: Post is echoed here, with updates.