This article is from the source 'washpo' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.

You can find the current article at its original source at http://www.washingtonpost.com/business/economy/economy-added-11300-jobs-in-january-unemployment-rate-dips-to-66-percent/2014/02/07/9724cdb8-8f8f-11e3-84e1-27626c5ef5fb_story.html?wprss=rss_homepage

The article has changed 5 times. There is an RSS feed of changes available.

Version 3 Version 4
Economy added 113,000 jobs in January; unemployment rate dips to 6.6 percent Economy added 113,000 jobs in January; unemployment rate dips to 6.6 percent
(about 9 hours later)
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. This was supposed to be the year the economy took off. Instead, new data released Friday show that 2014 stumbled out of the gate.
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. Only 113,000 jobs were added in January, the Labor Department reported, the second straight month of lackluster hiring. Some analysts said that the wickedly cold weather was freezing out jobs. But others say that the results reflect a genuine slowdown in economic growth.
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 some good news in the data: The January unemployment rate inched down to 6.6 percent. The labor force expanded, and hourly wages rose 5 cents. But there was also broad agreement that the new year is not off to a spectacular start.
“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 economic advisory firm Sonecon and a former top official at the Commerce Department. “We need two, three, four more months of weak numbers before we say there’s any real problem.”
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. Several factors have fueled hopes that 2014 would break the recovery out of its long slog. The federal budget deal struck in December means there will be no big new spending cuts or tax hikes this year. And the economy grew at the fastest pace in a decade during the second half of last year thanks to a robust private sector. Together, economists expect those dynamics to clear the runway for the recovery.
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. But January’s employment report — the first major piece of economic data for this year — has clouded the picture. Job growth was constrained by a sharp decline in the public sector. The federal government shed 12,000 jobs, while states and localities cut 17,000 workers. Economists were also surprised by a drop in educational services, which has been one of the drivers of job growth, even during the recession. Another engine of hiring — health care — added a meager 1,500 jobs 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 picture was brighter elsewhere: The construction industry expanded by 48,000 workers, the biggest gain since March 2007. Manufacturing clocked in with a respectable 21,000 jobs.
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. The growth in those industries, which are particularly sensitive to bad weather, served as a counter to arguments that January’s record cold temperatures hurt job growth. Still, some economists said that the decline in retail employment could be the work of Old Man Winter.
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. Stuart Hoffman, chief economist for PNC Financial Services, said he expects January’s results to be revised upward when the government releases updated tallies next month. He also remained optimistic that hiring will soon pick up.
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. “We won’t strike out three months in a row,” he said. “Keep the faith, baby, keep the faith.”
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 White House used the report to urge Congress to revive federal unemployment benefits, which were cut off in December. A proposed three-month extension failed Thursday in the Senate. In an interview, Labor Secretary Thomas Perez said that the benefits, along with proposals to raise the minimum wage and overhaul federal immigration laws, are the major components of the Obama administration’s plan for expanding the economy.
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. “If at first you don’t succeed, try, try again,” Perez said. “If you cut these benefits, you not only hurt those people but you also create a further drag on the economy.”
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. There had been signs that January job growth might not meet expectations. A closely watched index of manufacturing activity tumbled last month. Auto sales were not as strong as hoped, and data from the housing sector have been mixed.
“The last two job reports could dampen the short-term economic outlook,” said Keith Hall, a senior research fellow at the Mercatus Center at George Mason University and former commissioner of the Bureau of Labor Statistics, which compiles the monthly numbers.
The jobs data present a challenge for the Federal Reserve as it eases its support for the economy. The central bank began tapering the amount of money it was pumping into the recovery last month 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 with the nation rapidly approaching that threshold, investors will begin to demand more clarity from the Fed on how it will react after the line is crossed.
U.S. stock markets rallied Friday despite the jobs data. Some analysts surmised that investors expected the weak reading to force the Fed to slow down its withdrawal of stimulus. Others suggested that Wall Street was focused on bright spots in the data and viewed the recovery as essentially on track.
“Market reaction has been muted as this employment release changes few minds about the direction of the economy,” said Scott Anderson, chief economist at Bank of the West.