WASHINGTON – A surprisingly weak jobs report for a second straight month has renewed concern that the U.S. economy might be slowing after a strong finish last year.
Employers added 113,000 jobs in January, far fewer than the average monthly gain of 194,000 last year. Job gains have averaged just 154,000 the past three months, down from 201,000 in the preceding three.
The sluggish job growth could undermine hopes that economic growth will accelerate this year. But economists also say they expect hiring to return to healthier levels in coming months. They note that solid job gains in January in areas like manufacturing and construction point to underlying strength.
The government said Friday that manufacturers, construction firms and mining and drilling companies added a strong 76,000 jobs combined.
“You rarely see expansions in these industries without the economy being in fairly healthy shape,” said Gary Burtless, an economist at Brookings Institution.
And more people began looking for work in January, a sign that they were optimistic about finding jobs. Many of these people found work, thereby reducing the unemployment rate to 6.6 per cent from 6.7 per cent in December. That’s the lowest rate since October 2008.
“The underlying trend in employment growth is still decidedly positive, despite the slowdown we experienced in December and January,” Diane Swonk, chief economist at Mesirow Financial, wrote in a research note.
Investors seemed generally pleased by the figures. The Dow Jones industrial average rose 78 points early in the day, before paring its gains by late morning.
Cold weather likely held back hiring in December, economists said, but the impact faded in January. Construction firms, which sometimes stop work in bad weather, added 48,000 jobs last month.
Over the past month, signs of economic weakness in the United States and overseas have sent stock prices sinking. Upheaval in developing countries has further spooked investors.
The anxiety marks a reversal from just a few weeks ago, when most analysts were increasingly hopeful about the global economy. The U.S. economy grew at a sturdy 3.7 per cent annual pace in the second half of last year. The Dow finished 2013 at a record high. Europe’s economy was slowly emerging from a long recession. Japan was finally perking up after two decades of stagnation.
But then the government reported a dismal hiring report for December: Employers added just 75,000 jobs. And on Monday, an industry survey found that manufacturing grew far more slowly in January than in December. A measure of new orders in the report reached its lowest level in a year. That report contributed to a dizzying 326-point plunge in the Dow.
Also this week, automakers said sales slipped 3 per cent in January. And last week, a measure of signed contracts to buy homes fell sharply, according to the National Association of Realtors.
On a more hopeful note, a survey of service sector companies, including retailers, banks and restaurants, found that they grew faster in January than in December.
Friday’s report showed that some higher-paying industries added jobs in January. Factories contributed 21,000. Professional and technical services, which includes architects and engineers, added 20,000.
But health care employment was mostly unchanged for a second straight month after adding 17,000 jobs a month last year. Retailers cut 12,900, the most in 18 months.
And in January, government shed 29,000 jobs, mostly in education and the Postal Service. That was the biggest drop in government employment in 15 months.
Average hourly earnings rose 5 cents to $24.21, Friday’s report said. Average hourly pay has risen 1.9 per cent in the past year, slightly ahead of the 1.5 per cent inflation rate.
AP Economics Writers Josh Boak and Paul Wiseman contributed to this report.
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