The U.S. grew jobs at a disappointing pace in January, the second consecutive month that hiring came in far below what economists were expecting.
The U.S. Department of Labor’s monthly jobs report said 113,000 new jobs were created during January 2014, some 70,000 below predictions.
And if that wasn’t enough gloomy news, the report upped December’s initial job count of 74,000 by a mere 1,000 jobs. A revision to the November numbers did better, adding 33,000 to 241,000 previously reported.
A bright spot: employment rate ticks down to 6.6%
The U.S. government’s Bureau of Labor Statistics, which compiles the monthly jobs and employment data, also issued annual revisions for all of 2013, adding 87,000 new jobs to the cumulative 2.038 million reported during the year. If it hadn’t been for the expectation the revision would be far higher — to 345,000 – that might have been considered good news.
One bright spot: the unemployment rate ticked down to 6.6 percent, even as the report revised up the size of the labor force by almost half-a-million workers. The labor force participation rate increased to 63 percent, an improvement, but still the lowest rate in more than 3o years. (Some previous decreases in the unemployment rate were caused as workers left the labor force through retirement or simply quit looking for work.)
Kathy Bostjancic, director of macroeconomic analysis at The Conference Board ,looked for some positive indications in the report, observing,
There is no doubt that inclement weather in December played a role, although construction jobs held up reasonably well in January. We expect that an eventual return to more normal weather conditions will allow job gains to rebound back towards their previous 180,000 – 200,000 trend pace.”
Still, she said two months of anemic job growth, “likely sparks uncertainty about the strength of the labor market and direction of the overall U.S. economy.”
Was bad weather in January a factor?
Money Manager Tim Hartzell, chief investment officer at Sequent Asset Management, told Bloomberg News, “I’m encouraged by the fact that we’re probably going to say there was a weather impact again in this report.”
However, John Lonski, team managing director for the Economics Group at Moody’s Analytics, which partners with ADP on the National Employment Report, discounted the weather explanation.
“The average job loss due to bad weather in January in the household survey (a part of the BLS report) is 419,000, but what they claim we lost was 40 percent less this January,” he said, pointing out that construction jobs grew during January, something not much seen in bad weather months.
According to this morning’s report, construction jobs grew very strongly, adding 48,000 new workers during the month. Other strong growth areas were:
- Manufacturing — Plus 21,000;
- Leisure and hospitality — Plus 24,000;
- Employment services — Plus 11,900, with temp staffing up by 8,100 jobs;
- Transportation and warehousing — Plus 9,900;
- Mining — Plus 7,200.
Sectors that are losing jobs
Health care, a robust growth area for the past several years, is showing signs of slowing. In December, the sector added only 2,400 jobs. In January, jobs dropped slightly, by 400. Hospitals and nursing homes were the cause of the drop, shedding a combined 9,400 jobs, which the increase in other areas wasn’t enough to cover.
Other sectors losing jobs were:
- Government — Minus 29,900, with the federal government shedding 12,000;
- Retail — Minus 12,900;
- Finance and insurance — Minus 7,500.
SHRM”S LINE report for February predicts that hiring will be better this month, with the service sector up 11.7 points over February a year ago. Manufacturing will improve, but just barely. Says SHRM, “In February, hiring rates will increase and layoff rates will fall in manufacturing and services compared with a year ago.”