US jobless lowest for year

WASHINGTON - In a first sign that America's economic recovery is beginning to make inroads into joblessness, national unemployment in January fell to a rate of 7.1 per cent - the lowest level for a year, writes David Usborne.

The improvement reflected payroll increases in manufacturing and the retail trade, which brought the rate down from 7.3 per cent, where it had remained stalled since last November.

In all, employment rose by 106,000 last month - the largest such increase in six months. However, the market had been expecting a rise of about 125,000.

The figures came on top of several encouraging economic indicators released earlier in the week, notably a jump in manufacturing productivity and factory orders.

In retailing, large department stores also reported that a rise in consumer spending recorded in December was sustained in January.

The employment statistics helped to fuel a third consecutive day of important gains on Wall Street, with the Dow Jones index again rising to record levels by yesterday's close.

The employment picture may look better than it is, however, because the monthly survey also showed roughly half a million workers actually dropping out of the labour market.

President Bill Clinton warned on Thursday that despite all the encouraging signs he remained uncertain about the prospects for job growth. Consequently, he is expected to press ahead with a stimulus package of about dollars 31bn ( pounds 21.45), which he is due to present later this month.

'I'm still not convinced that the country is set on the right course in terms of generating jobs. And that's the key thing - jobs,' Mr Clinton told reporters.

Yesterday's figures are the last principal indicators he will receive before he finalises his budget and recovery packages.