US jobs growth lower than expected in January

people queuing

Related Stories

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.

More on This Story

Related Stories

From other news sites

* May require registration or subscription

The BBC is not responsible for the content of external Internet sites

More Business stories

RSS

BBC Business Live

  1.  
    MALAYSIA AIRLINES 06:32: BBC Radio 4

    Can an airline survive two major plane disasters in a single year? Today says that's the question for Malaysia Airlines. Those who have flown on the airline recently report near empty cabins. Can Malaysian Airlines survive? David Learmount from Flightglobal thinks so. "Malaysia will be given a chance by the government and it will be given some money. People don't like seeing airlines go bust," he told Today listeners.

     
  2.  
    BUSINESS LENDING 06:22: Radio 5 live

    Wake Up to Money looks forward to later this morning when the Bank of England will give us an update on its Funding for Lending scheme - introduced two years ago to encourage banks to lend to small businesses. It's not been a rip-roaring success: a previous report said, despite all that help, the amount of money being lent was down £2.7bn over the first three months of this year.

     
  3.  
    QANTAS 06:12:
    A Qantas Airline plane gets takes off at Sydney Airport in Sydney on August 28, 2014

    Overnight Australia's national airline Qantas reported a huge loss of A$2.8bn for the past year - its biggest ever. That was partly due to writing down the value of its planes by A$2.6bn. Qantas added weak domestic demand, poor consumer spending and rising fuel costs also contributed. Chief executive Alan Joyce tried to put some gloss on the figures: "There is no doubt today's numbers are confronting... but they represent the year that is past".

     
  4.  
    SCOTTISH INDEPENDENCE 06:03:
    Saltire

    Pro-independence business people in Scotland have hit back. 200 of them have signed a letter, appearing in the Herald online, saying that the business case for independence "has been made - and it's strong and ambitious". They add: "The real threat to Scotland is the real possibility of a British exit from the European common market".

     
  5.  
    Rebecca Marston Business reporter, BBC News

    The monitor has been fitted and off we go. You can plug in to us bizlive@bbc.co.uk or @bbcbusiness. Here until 13:00.

     
  6.  
    06:00: Ian Pollock Business reporter, BBC News

    Good morning, the Business Live page will have its finger on the business pulse, just for you.

     

Features

From BBC Capital

Programmes

  • Going through ice across the Northwest PassageThe Travel Show Watch

    Navigating the treacherous Northwest Passage through ice and Arctic storms

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.