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US nonfarm payrolls unexpectedly declined 20,000 in January, much smaller than a revised 150,000 December drop that was larger than previously reported, figures from the Labor Department showed. Public-sector payrolls declined 8,000. Private-sector payrolls fell 12,000, smaller than a 22,000 drop forecast by ADP. The strongest employment increases were for temporary help services (+52,000), retail trade (+42,000), and education/health (+16,000). Manufacturing employment grew 11,000 in January, the first gain in three years. The largest payroll losses were in construction (-75,000), couriers/messengers (-23,000), and leisure/hospitality (-14,000). The unemployment rate unexpectedly fell to 9.7% in January, the lowest since August, from 10.0% in December, indicating labor market conditions have improved.

Average hourly earnings increased 0.3% m/m to $18.89 in January and rose 2.5% y/y. Average weekly hours increased to 33.3 from December’s 33.2.