US employment growth disappoints
Print Edition
US employers hired far fewer workers than expected in January and job gains for the prior month were barely revised up, suggesting a loss of momentum in the economy, even as the unemployment rate hit a new five-year low of 6.6 percent.
Nonfarm payrolls rose only 113,000, the Labor Department said yesterday. But with strong job gains in construction, cold weather probably was not a major factor in January.
The second straight month of weak hiring — marked by declines in retail, utilities, government, and education and health employment — could be a problem for the Federal Reserve, which is tapering its monthly bond-purchasing stimulus program.
December payrolls were raised only 1,000 to 75,000.
The data also come on the heels of a report on Monday showing a surprise drop in factory activity to an eight-month low in January and could rattle investors, already nervous about slowing global growth.
Economists polled by Reuters had forecast payrolls increasing 185,000 last month and the unemployment rate to hold steady at 6.7 percent.
But there was a silver lining in the report. The jobless rate fell a tenth of a percentage point to 6.6 percent last month, the lowest since October 2008.
The household survey from which the jobless rate is derived showed gains in employment. In addition, more people came into the labor force, a positive sign for the labor market.
The participation rate, or the proportion of working-age Americans who have a job or are looking for one, increased to 63 percent from 62.8 percent in December, when it fell back to the more than 35-year low hit in October.
The unemployment rate is now flirting with the 6.5 percent level that Fed officials have said would trigger discussions over when to raise benchmark interest rates from near zero.
But policymakers have made it clear that rates will not rise any time soon even if the jobless threshold is breached.
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