Job growth trudges along for 2nd month

Rise in payrolls also lower than projection; unemployment dips

2/8/2014

NEW YORK TIMES

Finance major Ezinwa Omodom, center, discusses internships with a representative of 3M Frontline during a job fair at the University of Toledo’s College of Business and Innovation. A U.S. report Friday showed the sizable employment gap between those with college degrees and those without a high school diploma.

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Employers added jobs at a slower-than-expected pace in January, the second straight month hiring has been disappointing and a sign the U.S. labor market remains anemic despite growth elsewhere in the economy.

Payrolls rose by 113,000, the Labor Department said Friday; economists had expected an 180,000 gain. The jobless rate, based on a separate survey that was more encouraging, actually fell a tenth of a percentage point, to 6.6 percent, the lowest since 2008.

The jobs report provided some cause for optimism. Solid hiring last month in manufacturing and construction point to underlying strength.

And in a healthy sign, more Americans began looking for jobs, suggesting they were more hopeful. A sizable 115,000 formerly jobless said they found jobs.

The data for January came after an even more disappointing labor-market report for December, which was revised upward only slightly Friday, to show a gain of just 75,000 jobs, from 74,000. The level of hiring in January was also sizably lower than the average monthly gain of 178,000 positions over the past six months, as well as the monthly addition of 187,000 over the past year.

The two weak months will prompt questions about whether the Fed acted prematurely when policymakers in December voted to begin scaling back the central bank’s expansive stimulus efforts.

The data are not expected to alter the Fed’s course, economists said, but another poor report on hiring next month might force policymakers to rethink their plan when they next meet in late March.

“In one line: Grim,” Ian Shepherdson, chief economist at Pantheon Macroeconomics, said in a note to clients Friday morning.

While seasonal adjustments may have played a role and upward revisions for hiring in October and November were more encouraging, he said, “The payroll rebound clearly is disappointing; none of the ground lost in December was recovered.”

Other economists conceded the picture for January was hardly bright. However, they said it was too soon to conclude the economy suffered a fundamental loss of momentum.

“We’re not seeing the takeoff that people wanted to see, but it’s not a disaster,” said Julia Coronado, chief economist for North America at BNP Paribas. “The 113,000 figure is definitely way below trend, but we want another month or two of data before we can draw conclusions.”

One mystery economists will focus on is why employment gains have not kept up with economic growth as measured by gross domestic product, which picked up substantially in 2013’s second half. The annualized pace of expansion was 3.2 percent in the fourth quarter and 4.1 percent in the third quarter.

One reason may be that technology is letting employers make do with fewer workers, such as the use of automated customer service systems instead of customer call centers or Internet retailers’ taking over from brick-and-mortar stores where sales associates prowl the floors.

Another shift is evident from the yawning gap in employment for college grads versus workers who lack high school diplomas. For people with a college degree or higher, the jobless rate was 3.1 percent, compared with 9.6 percent for Americans who did not finish high school.

In the report on January, one sector holding back payrolls was the government, which shrank by 29,000 jobs in January. Excluding that loss, private employers added 142,000 positions, a slightly better showing.

The Associated Press contributed to this report.