Friday, February 7, 2014

Employment Gains Affected by Winter Weather

Total nonfarm payroll employment rose by 113,000 in January, and the unemployment rate was little changed at 6.6 percent, according to the U.S. Bureau of Labor Statistics. The change in total nonfarm payroll employment for November was revised from 241,000 to 274,000, and the weak December number was revised from 74,000 to 75,000. In 2013, employment growth averaged 194,000 per month.

In January, goods producing employment rebounded from the weather-induced December weakness, adding 76,000 jobs. Job gains occurred in construction, manufacturing, wholesale trade, and mining. Employment in manufacturing increased by 21,000 and in wholesale trade by 14,000. Mining added 7,000 jobs in January, compared with an average monthly gain of 2,000 jobs in 2013. Construction added 48,000 jobs over the month, more than offsetting a decline of 22,000 in December.

Weak employment numbers in the services and private sector resulted in weaker than expected January results. The services sector added 37,000 the lowest reading in over six months. While, the public sector continued to drag, declining for the second consecutive month. Both sectors may have been affected by the severe winter weather.

The unemployment rate fell only slightly to 6.6% from 6.7% in December, while the labor force participation rate edged up to 63.0% from 62.8% in December. The number of long-term unemployed (those jobless for 27 weeks or more) declined by 232,000 in January to 3.6 million. These individuals accounted for 35.8% of the unemployed. The number of long-term unemployed has declined by 1.1 million over the year.

The Federal Reserve has begun tapering, however this second consecutive weak report could cause tapering to follow a slower than planned schedule, even as the unemployment rate dropped closer to the Federal Reserve’s target 6.5% unemployment at which point the Federal Reserve has said it will begin evaluating raising rates. However, the improvement needs to be real job growth, not a declining labor force.

Read the BLS report.

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