US job growth below expectations in January

Friday 07 February 2014 14.11
New hires in construction and professional services were offset by layoffs in retail and government agencies
New hires in construction and professional services were offset by layoffs in retail and government agencies

The US economy added 113,000 jobs in January, far fewer than economists had expected and suggesting continuing weakness after December's poor numbers, official data has shown.

While hiring was strong in construction and professional services, retailers and government authorities shed significant numbers, pulling down the net gain, data from the Labor Department's survey showed.

Economists had forecast a gain of 175,000 jobs after December's paltry 75,000, to confirm economic growth was on track.

The January number was well below the 2013 average of 194,000 net new jobs per month.

Even so, the overall unemployment rate, based on a separate household survey, fell to 6.6% from 6.7%, with data showing more people returning to the labour force and obtaining jobs.

A report on Monday showing a surprise drop in factory activity to an eight-month low in January worried investors and fanned fears of a rapid cooling off in growth after the economy's robust performance in the second half of 2013.

But a reading on the dominant services sector on Wednesday showed a fairly strong expansion in activity in January.

A brightening growth picture encouraged the Federal Reserve last month to move forward with a scaling back of its bond-buying stimulus. Officials at the US Fed will be anxious to see payrolls improving from their weather-depressed December level.

While the unemployment rate is forecast holding steady, there is a risk it could decline even further in January because jobless benefits for more than one million long-term unemployed Americans expired at the end of December.