AP

A WEEK ago, Americans were told that their economy had expanded for a second consecutive quarter, and rapidly at that: output grew at an annual rate of 5.7%. This week, they are reminded that a return to growth has yet to benefit the jobless. The economy lost 20,000 jobs in January, a decline driven by the loss of 75,000 jobs in the construction sector. Economists had forecast an increase in employment of around 15,000. The unemployment rate, based on household rather than establishment data, showed a slight improvement, dropping from 10% to 9.7%, but nearly 15m Americans remain unemployed. As Larry Summers put it in Davos last week, the American economy is experiencing “a statistical recovery and a human recession”.

Several positive trends continued in January. Firms added 52,000 temporary workers and increased hours, just as they did in December, hinting at growing if cautious optimism. Employment rose in health, education and professional services, and retail employment grew by 42,000 in January, on a seasonally adjusted basis, after declining in December. Manufacturing employment also grew, by 11,000, the first increase since the beginning of recession. Analysts point out that the adjustment of the data is tricky around the holiday season, and actual underlying employment may have grown in January.

But many economists may view this release as more disappointing than the previous month's figure. The Labour Department published the results of its annual benchmark revision of previous employment data. Through the 12 months to March 2009, the American economy lost 930,000 more jobs than had been previously estimated. It now appears that over 700,000 jobs were lost in each of the first three months of last year, a significantly worse performance than originally thought. Meanwhile, data for the last two months of 2009 were revised to show a larger increase in employment in November, but a larger decline in December, for a net drop of 5,000 jobs relative to previous reports.

And while the employment-population ratio increased slightly from December to January, and off record lows, the problem of the long-term unemployed continues to grow. Just over 41% of all unemployed workers, over 6.3m workers, have been out of work for 27 weeks or more.

Most troubling of all is the continued failure of economic growth to benefit the labour market. Employment fell by over 300,000 jobs during the last three months of 2009, despite strong expansion in GDP. The first quarter of 2010 is unlikely to show as big an output gain, suggesting that the pace of improvement in employment may be slowing, even as regular job growth has yet to return. And the situation may be more dire still; initial jobless claims have grown in recent weeks, indicating that what momentum there was in labour markets has been lost.

The January data will increase the pressure on the Senate to pass a jobs bill. The House of Representatives assented in December to a measure designed to boost hiring, worth $154 billion, and the president outlined a number of policies to encourage employers to hire in his state-of-the-union address and budget proposal. At the centre of the package is a $33 billion tax credit, available to firms that add employees or increase hours or wages. The policy may be just the kick firms need to take on new help. In the fourth quarter, labour productivity rose by 6.2% as businesses expanded output while maintaining lean payrolls. The government will hope to provide an incentive to begin handling rising orders with new workers, who will then use their earnings to shore up consumption and the recovery as a whole.

But with the revelation that labour markets early last year were far weaker than expected and the growing indications that the recovery will be jobless, the country's leaders may be wishing they had done more to boost the economy sooner. The longer it takes to achieve steady job creation, the more uncertain recovery will become.