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| Economy added 113,000 jobs in January; unemployment rate dips to 6.6 percent | |
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| The job market proved lackluster once again in January, with the economy adding 113,000 new jobs, according to government data released Friday morning, raising new questions about the strength of the recovery. | The job market proved lackluster once again in January, with the economy adding 113,000 new jobs, according to government data released Friday morning, raising new questions about the strength of the recovery. |
| Analysts had been expecting a much stronger pace of hiring after other data showed that the economy picked up momentum at the end of last year. The report from the Labor Department also reaffirmed that December added a paltry 75,000 jobs. | Analysts had been expecting a much stronger pace of hiring after other data showed that the economy picked up momentum at the end of last year. The report from the Labor Department also reaffirmed that December added a paltry 75,000 jobs. |
| There was a silver lining, however. The unemployment rate inched down in January to 6.6 percent, even as more people joined the workforce. The number of long-term jobless also fell by more than 200,000 workers to 3.6 million. | There was a silver lining, however. The unemployment rate inched down in January to 6.6 percent, even as more people joined the workforce. The number of long-term jobless also fell by more than 200,000 workers to 3.6 million. |
| “It looks to me like a pause,” said Robert Shapiro, chairman of the Sonecon economic advisory firm and a former top official at the Commerce Department. “We need two, three, four months of weak numbers before we say there’s any real problem with the recovery.” | “It looks to me like a pause,” said Robert Shapiro, chairman of the Sonecon economic advisory firm and a former top official at the Commerce Department. “We need two, three, four months of weak numbers before we say there’s any real problem with the recovery.” |
| Markets appeared unfazed after the report’s release, posting sharp gains after Friday’s opening bell. The Dow Jones average was up 0.5 percent, the Standard & Poor’s was up 0.6 percent and the Nasdaq rose 0.9 percent. | Markets appeared unfazed after the report’s release, posting sharp gains after Friday’s opening bell. The Dow Jones average was up 0.5 percent, the Standard & Poor’s was up 0.6 percent and the Nasdaq rose 0.9 percent. |
| Some economists blamed the weather for December’s disappointing showing, but that argument is tougher to make for January. The construction industry, which is among the most sensitive to inclement conditions, added 48,000 jobs in January after shedding about half that many the previous month. However, retail continued to lose workers, cutting 12,000 in January. | Some economists blamed the weather for December’s disappointing showing, but that argument is tougher to make for January. The construction industry, which is among the most sensitive to inclement conditions, added 48,000 jobs in January after shedding about half that many the previous month. However, retail continued to lose workers, cutting 12,000 in January. |
| The White House used the report to urge Congress to extend emergency unemployment benefits. “Today’s report is another reminder of both the progress that has been made and the challenges that remain,” Council of Economic Advisers Chairman Jason Furman said on the White House blog. “But the economy is still healing from the Great Recession and steps are still needed to expand economic opportunity. Given the elevated long-term unemployment rate, extending emergency unemployment benefits for the 1.7 million workers who lost them is critical.” | The White House used the report to urge Congress to extend emergency unemployment benefits. “Today’s report is another reminder of both the progress that has been made and the challenges that remain,” Council of Economic Advisers Chairman Jason Furman said on the White House blog. “But the economy is still healing from the Great Recession and steps are still needed to expand economic opportunity. Given the elevated long-term unemployment rate, extending emergency unemployment benefits for the 1.7 million workers who lost them is critical.” |
| There were some signs that job growth in January might not meet expectations. A closely watched index of manufacturing activity tumbled last month, with new factory orders particularly weak. Auto sales were not as strong as hoped, and data from the housing sector have been mixed. | There were some signs that job growth in January might not meet expectations. A closely watched index of manufacturing activity tumbled last month, with new factory orders particularly weak. Auto sales were not as strong as hoped, and data from the housing sector have been mixed. |
| But those numbers were overshadowed by reports showing the nation’s gross domestic product grew at the fastest pace in a decade during the second half of last year. Consumer spending has proven surprisingly resilient, and businesses are stockpiling inventory in anticipation of future demand. | But those numbers were overshadowed by reports showing the nation’s gross domestic product grew at the fastest pace in a decade during the second half of last year. Consumer spending has proven surprisingly resilient, and businesses are stockpiling inventory in anticipation of future demand. |
| Washington, however, remains a wild card. The federal workforce shrank by 13,000, with the bulk of that stemming from the U.S. Postal Service. | Washington, however, remains a wild card. The federal workforce shrank by 13,000, with the bulk of that stemming from the U.S. Postal Service. |
| In addition, the nation’s debt ceiling will be reinstated Friday, and Treasury Secretary Jack Lew has said that the government will exhaust its borrowing authority between late February and mid-March. Republicans have yet to agree amongst themselves on a compromise, but both parties have said they will not let the nation default on its obligations. And the political head winds are beginning to ease after lawmakers agreed on a budget deal that will last until 2015. | In addition, the nation’s debt ceiling will be reinstated Friday, and Treasury Secretary Jack Lew has said that the government will exhaust its borrowing authority between late February and mid-March. Republicans have yet to agree amongst themselves on a compromise, but both parties have said they will not let the nation default on its obligations. And the political head winds are beginning to ease after lawmakers agreed on a budget deal that will last until 2015. |
| The weak jobs data present a challenge for the Federal Reserve as it eases its support for the economy. The central bank began scaling back the amount of money it is pumping into the recovery in January and expects to wind down its bond-buying program this year. | The weak jobs data present a challenge for the Federal Reserve as it eases its support for the economy. The central bank began scaling back the amount of money it is pumping into the recovery in January and expects to wind down its bond-buying program this year. |
| In fact, the unemployment rate has fallen faster than the Fed has anticipated. The central bank has promised to keep its benchmark short-term interest rate near zero until “well past” the time the unemployment rate hits 6.5 percent. But as the nation inches closer to that threshold, investors will begin to demand more clarity from the Fed on how it will react after the line is crossed. | In fact, the unemployment rate has fallen faster than the Fed has anticipated. The central bank has promised to keep its benchmark short-term interest rate near zero until “well past” the time the unemployment rate hits 6.5 percent. But as the nation inches closer to that threshold, investors will begin to demand more clarity from the Fed on how it will react after the line is crossed. |