US job growth remains weak in January, unemployment rate falls to 6.6%

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US job growth remains weak in January, unemployment rate falls to 6.6%

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Disappointing jobs news from the United States for the second month running.

Employers there hired far fewer workers than expected in January and job gains for December were barely revised up, suggesting a loss of momentum in the US economy.

Hiring slipped in retail, utilities, government, and education and health.

Just 113,000 new jobs were created last month.

The December total was revised upwards by just 1,000 to 75,000.

The unemployment rate did though drop to 6.6 percent from 6.7 percent – a new five-year low.

And that fall came even as surveys of US households showed more people began looking for work in January, which is a sign that they were optimistic about finding a job.

December’s weak figures were blamed on cold weather but that was not a factor in January. There were strong gains in the weather-sensitive construction sector.

The numbers may be a problem for the Federal Reserve, which has started to taper its stimulus programme and now has to decide on its next steps.

New Fed chief Janet Yellen, and the central bank’s other policymakers, will be conscious that this is weakest two months of job growth in three years.

However, their next policy-setting meeting is not until March 18-19. By then, the economic clouds may have cleared.

The unemployment rate is now flirting with the 6.5 percent level that Fed officials have said would trigger discussions over when to raise benchmark interest rates from near zero.

But policymakers have made it clear that rates will not rise any time soon even if the unemployment threshold is breached.

“This definitely still keeps the questions in play about the strength of the economy,” said Anthony Valeri, an investment strategist at LPL Financial in San Diego. “We probably won’t get a clean read on the data until early March.”

Wall Street was not too upset with investors focusing on the lower jobless rate and the fact that the gains were in key sectors including manufacturing.

As one analyst said: “The jobs created were in the sectors where you want to see strength”.

Another good sign was that, unlike the poll of employers used to calculate the payrolls figures, the household survey from which the jobless rate is derived found strong gains in employment.

The increase in the number of people in the labour force was also encouraging.

The participation rate, or the proportion of working-age Americans who have a job or are looking for one, increased to 63 percent from 62.8 percent in December, when it fell back to the more than 35-year low hit in October.