The January reading of 113,000 was well below the expected pace of increase of 180,000, but the report stated that some 262,000 employees were held at bay by inclement weather conditions – a similar reading to December. And while the report fell short of forecast, the gains for construction and manufacturing get right to the heart of the debate and reaffirm that demand is strengthening and not weakening. When the economy finally manages to dig out from an unusually snowy and cold winter, activity may strengthen. Certain areas of the household survey seemed to deliver good news.
The first official labor data of the year was accompanied by some housekeeping for the year ending March 2013 with the economy generating 347,000 more jobs than at first thought.
The unemployment rate at 6.6% marked a one-tenth dip from year-end and the lowest since October 2008. The civilian labor force rose by 499,000 in January and the labor force participation rate rose marginally to 63.0%. The chart below shows how both labor measures moved in the right fashion – the total reading of unemployed declined while those in employment rose. In addition the Labor Department said its measure of long-term unemployed, those out of work for more than 27-weeks, fell in January by 232,000 to 3.6 million.
Chart – Household Survey showed rising employment and falling unemployment
The government noted in the latest report that the 48,000 rise in construction workers more than offset a December decline of 22,000. That also helps smooth out the discrepancy between official and ADP versions of the health of building activity. The pace of manufacturing payroll growth at 21,000 in January was three-times its average pace of 7,000 for all of 2013. Wholesale payrolls grew by 14,000 mainly in nondurables according to the report. Mining payrolls jumped by 7,000 and compares to a yearlong average of just 2,000.The government said that professional and business services added just 36,000 employees, which is healthy yet below the 2013 average pace of 55,000 new workers each month. Likewise leisure and hospitality positions grew more slowly than usual at a 24,000 pace rather than an average of 38,000. The government as a whole shed 29,000 workers in January with the federal government’s share at 12,000. The report noted that 9,000 of that tally was due to losses at the US Post Office. Retail also shed workers in January.
Surprisingly, December payroll data was revised by only 1,000 to a gain of 75,000. However, far more jobs were created in November than at first thought. That tally rose to 274,000 from 241,000 creating a two month net addition of 34,000.
Before the release stocks were discounting positive news – S&P index futures were higher by 6.0 points – and have since doubled its gain to 1779. The post-reading response created additional volatility with futures spanning a 30-point range. Also benefitting is a falling benchmark treasury yield, which has responded to a lame headline reading by reversing an earlier rise in yields. Currently bond prices are higher shaving two pips off the treasury yield to 2.68%.