The unemployment rate fell sharply in January from 6.7% to 6.3%, the Labor Department said Friday. Most of the drop in unemployment occurred because some people out of work found jobs, but others stopped looking for work and were no longer counted as unemployed.
Even last month's small job gain benefited from a technical adjustment to the government's data. And without an increase of 80,000 temporary jobs, the economy would have posted a net loss for January.
"What you have is a lousy report that shows a stalling recovery," said Nela Richardson, chief economist at the payroll processor ADP.
Soaring new virus infections in late fall had forced tighter business restrictions in California, New York, Virginia and other states, thereby reducing the need for workers. Consumers have also been less willing to dine out, travel or go to concert halls and other venues as the pandemic has persisted. Some business closures, notably in California, have since been eased or lifted, but in many cases too late to affect last month's jobs data.