Friday’s unemployment report confirmed what many workers already had suspected: Five years after the job market plunged off a cliff, the climb back remains a tough slog.
In January, employers created 113,000 additional jobs, well below most economists’ estimates of roughly 185,000. And a second look at December’s data brought an upward revision of only 1,000 new jobs, to a meager 75,000.
“Employment growth clearly has downshifted over the past two months,” says Doug Handler, an economist with IHS Global Insight. “The January performance was a huge disappointment since we can no longer dismiss December’s poor numbers as an aberration.”
For all of 2013, the economy added jobs at an average of 194,000 a month, about twice the December-January average.
The National Retail Federation pointed to unusually cold weather as a “major factor” in slowing some store sales and hiring. But most economists say winter weather had an insignificant impact overall.
Jobless Rate Falls
Despite the recent sluggish pace, job growth was good enough to nudge down the unemployment rate by a tenth of a point to 6.6 percent. That was the best reading since October 2008, when the Great Recession started shredding jobs at a frantic pace. In January 2009, the economy lost more than 800,000 jobs.
Responding to this latest report, the White House noted that the economy has now generated a net job gain for 47 straight months.
“The unemployment rate has fallen 1.3 percentage point in the last 12 months,” Jason Furman, head of the White House’s Council of Economic Advisers, said in a blog post. He said businesses have added 8.5 million jobs in less than four years.
In January, the labor-force participation rate edged up two-tenths of a percentage point to 63 percent. That’s well below the 66 percent rate that prevailed from 1989 to 2009. Still, January’s uptick was a “silver lining,” says Stuart Hoffman, an economist with PNC Bank.
Harbinger Of Harder Times
A few other data points also offered something to cheer in January. For example, construction added 48,000 jobs, and manufacturing tacked on 21,000 more. Mining was strong with a gain of 7,000 jobs. And the leisure and hospitality industries continued to grow, adding 24,000 jobs.
Those job openings disproportionately helped men. For women, it was a much tougher month, according to an analysis done by the Institute for Women’s Policy Research. That report concluded that women lost 51,000 net jobs because of cuts in government, business services, education and health services.
Adding it all up, the negatives outweighed any positives, leaving economists to see January as a disappointment. Even worse, the poor performance may be a harbinger of harder times for the gross domestic product.
“There’s enough negative evidence in this report to help validate a softening of GDP growth from the fourth quarter’s 3.2 percent to 1.9 percent in the first quarter,” IHS Global Insight’s Handler said.
And the report offered little reason for those people with jobs to think they’ll get big raises anytime soon. The average workweek was unchanged at 34.4 hours, and hourly wages were up a nickel to $24.21. Over the past year, wages have risen only 1.9 percent, or 46 cents.
Gains In Productivity
The wage gains stand in contrast to recent jumps in worker productivity. A separate Labor Department report this week showed workers’ productivity increased at a strong 3.2 percent annual rate. That was well above the long-term trend rate of about 2 percent.
In fact, the last six months of 2013 represented the strongest period for productivity growth in four years. Rising productivity, a measure of output, generally reflects improvements in workers’ skills and equipment.
While output growth has soared, labor costs have stalled. The government report showed that for businesses, labor costs fell in three of the past four quarters.
The stock market initially reacted badly to the disappointing jobs report, but then recovered to head higher. Many analysts say that was because investors now think that with a weaker-than-expected economy, the Federal Reserve policymakers will go slower on making policy changes that could lead to higher interest rates. Low rates on Treasury bonds can make stocks a more attractive place to put your money.
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