The US economy added just 113,00 new jobs in January, according to figures released on Friday, fuelling fears that the recovery in the jobs market appeared to have stalled.
Economists had been expecting the economy to add around 180,000 jobs. This is the second month of disappointing jobs news from the US Department of Labor, which last month surprised economists by saying that the US had added just 74,000 jobs in December, well below the 200,000 some had been expecting. That number has been revised up marginally to 75,000. Last year the economy added an average of 194,000 jobs per month.
Both the number of unemployed persons, at 10.2m, and the unemployment rate, down 0.1% to 6.6%, changed little in January. The percentage of the population in or looking for work edged up to 63% from a three-decade low of 62.8% last month.
The number of long-term unemployed (those jobless for 27 weeks or more), fell by 232,000 but the figure was likely impacted by the fact that 1m Americans lost extended federal unemployment benefits at the end of December and it remains high at 3.6m. These individuals accounted for 35.8% of the unemployed.
The news comes after a last-ditch effort to extend an emergency program for the long-term unemployed failed to pass in the Senate on Thursday. The federal program, introduced at the start of the recession to help unemployed workers once their state benefits expired, ran out in December after Republicans insisted that new measures should be found to pay for it. Payments were halted for 1.7m existing recipients in the New Year.
Jason Furman, chairman of the White House council of economic advisers, said: “Today’s report is another reminder of both the progress that has been made and the challenges that remain. Businesses have now added 8.5m jobs over the last 47 months and the unemployment rate ticked down to its lowest level in more than five years. But the economy is still healing from the Great Recession and steps are still needed to expand economic opportunity.”
He said it was “critical” that Congress extend emergency unemployment benefits.
Republican House speaker John Boehner said: “The American people continue to ask ‘where are the jobs?,’ and the president clearly has no answers.”
He said the president’s “failure to lead” had resulted in the “worst jobs recovery in history” and claimed this week’s report by the Congressional Budget Office showed Obama’s health care law would “drive millions out of an already-diminished labor force.”
The Labor Department said construction added 48,000 jobs over the month, offsetting a decline of 22,000 in December. Leisure and hospitality employment added 24,000, less than the 38,000 it averaged per month in 2013. Retail employment was down 13,000 and the Federal government cut 12,000 - 9,000 of those jobs were cut from the post office.
Job growth in the last two months has been well below the roughly 200,000 jobs added each month from August to November last year. There were some good signs in the report. The number of involuntary part-time workers fell by 514,000 to 7.3 million in January. The number of long-term unemployed has declined by 1.1m over the year. But unemployment rates for those worst hit by the recession remain significantly higher than the 6.6% average. In January the unemployment rate for teenagers was 20.7%, for black people it was 12.1% and hispanics 8.4%.
On Wednesday ADP, the US’s largest payroll processor, said the private sector had added 175,000 jobs between in January. Small businesses added 75,000 new jobs and construction added 25,000 but manufacturing lost 12,000.
Mark Zandi, chief economist of Moody’s Analytics, which helps compile the report, said: “Cold and stormy winter weather continued to weigh on the job numbers. Underlying job growth, abstracting from the weather, remains sturdy. Gains are broad-based across industries and company sizes, the biggest exception being manufacturing, which shed jobs – but that is not expected to continue.”
But Dan Greenhaus, chief global strategist at BTIG, questioned the impact of January’s polar vortex. “If you can believe it, while January as a whole was a poor weather month, weather was actually better in January during the part of the month that actually matters. For this reason, we are somewhat unsurprised to see construction jobs – an area of focus if one were to look for a weather effect – increased by 48,000 in January. Admittedly, there were 262,000 people not at work due to bad weather but this is basically right in line with what’s normally seen in January. So our first inclination is that weather in general did not meaningfully and negatively affect this report, at least not in the most glaring manner possible,” he wrote in a note to clients.
The jobs news comes against a background of steady improvement in many other areas of the US economy.
At the end of last month the commerce department announced that the US economy expanded at an annual rate of 3.2% in the last three months of 2013. Consumers and businesses appear to have largely ignored the government shutdown and fight over the debt ceiling last year that many economists worried would harm the economy.
“Payroll growth appears to have slowed but, given the strength of economic growth in the second half of last year, we expect to see a rebound in the monthly gains over the next few months,” says Paul Ashworth, chief US economist at Capital Economics.
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