US jobs growth lower than expected in January

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The US economy added 113,000 jobs in January, the second month in a row the figure has been weaker than expected.

Economists had predicted the US Labor Department would report an increase of about 180,000 new jobs.

However, the unemployment rate fell to 6.6%, the lowest level since October 2008.

The jobless figures will raise concerns that, after strong growth in the second half of 2013, the US economic recovery is beginning to lose its steam.

US stock markets shrugged off the news - with shares on Wall Street rising in early trading.

Analysis

A disappointment but not a disaster, was how one American economist put it. 113,000 is certainly rather disappointing.

The workforce and the population in the US are growing so the economy needs to add new jobs to keep up.

How many is uncertain, but the most recent figure is in the range of economists' estimates.

In short, the US could do with faster job creation to get unemployment down and entice back the people who have given up looking for work. Those people are not counted as unemployed.

For sure, the unemployment rate is a lot better than in the dark days of the recession: 6.6% of the workforce now down from a peak of 10% in 2009.

But here's another important figure, the percentage of the population (over 16 years old) in work: between 62% and 63.4% in the years before the crisis, but below 59% now.

Getting America back to work is unfinished business.

The unemployment rate is calculated from a different survey to the jobs figure - known as non-farm payrolls. The rate is based on a survey of households, while the jobs figure is based on a survey of employers.

December's surprisingly weak payrolls figure was revised up only modestly to 75,000, from 74,000.

The construction industry, most vulnerable to the impact of bad weather, added 48,000 jobs in January, indicating that while the weather may have been responsible for December's weak figures, it does not appear to have been a factor in January.

Manufacturing hiring also picked up, adding 21,000 jobs.

Another positive factor from the report was that more Americans started looking for, and found, work.

But there were declines in hiring in retail, utilities, government, and education and health employment.

'Ugly headline'

Earlier this week, an unexpectedly weak manufacturing report raised concerns about the strength of the US economy and sent the Dow Jones tumbling by 326 points.

However, analysts were not too despondent about the latest numbers.

"We think the employment market is improving, but will do so in fits and starts," said David Carter from Lenox Wealth Advisors immediately after the numbers were released.

"Today, the ugly headline number will negatively impact markets, but there are enough positive indications that ultimately the market will move higher over time."

A woman with coat and scarf on The cold weather in the US may have hurt December's figure

Joe Manimbo, senior market analyst at Western Union Business, said: "It is an improvement but a number this soft does feed worries about slowing US growth. The report fans uncertainty about the Federal Reserve's next move.

"Anyone looking for an alibi can point to the weather; it does not derail hopes of faster US growth and further Fed tapering," he added.

'Thoughtful people'

But one of the members of the Federal Reserve, Richard Fisher, told the broadcaster CNBC that the bank wouldn't be swayed by one month's numbers, blaming the weather for the weak report.

"I will say this about the rest of our committee, they are not swayed by a single number. They are thoughtful people," he said.

The US Federal Reserve has started withdrawing its extra support from the economy - a process known as tapering - after judging that the economy was improving, citing stronger jobs growth as one of the factors.

The central bank had been spending $85bn a month buying bonds, but has now reduced that to $65bn a month.

The unemployment rate is now very close to 6.5% - the level at which the Fed said it would start to consider an increase in interest rates, although most analysts agree a rate rise is still a long way off.

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