UPDATED -- Unemployment in the U.S. continues moving lower, but job growth is also weakening, according to new U.S. Labor Department figures.
Payrolls increased by 113,000 jobs in January, better than December gain of 75,000, but less than November’s increase of 274,000 and the average of more than 200,000 per month in August through November. The January gain was far less than many economists were expecting.
The report follows a separate one from two days earlier showing private sector employment added 175,000 jobs in January.
The new figure pushed the nation’s unemployment rate down to 6.6% from 6.7% in December, the lowest rate since October 2008. In January, job gains occurred in construction, manufacturing, wholesale trade, and mining.
Of the jobs added in January 3,200 were in trucking, while the wider transportation and warehousing sector, which includes trucking, added 10,000 jobs. The number of trucking jobs includes those only in the for-hire sector, omitting ones in businesses such as construction or with private fleets.
“A weak start to the year with back-to-back disappointing employment reports in December and January suggesting momentum in the labor market has waned,” says Lindsey Piegza, chief economist at the investment firm Sterne Agee. “While weather may have slowed consumer foot traffic at points during the month or impeded manufacturing capacity in parts of the country, goods production hiring improved at the start of the year making it difficult to blame weather for the headline weakness.”
The big question is will this weakness be enough to taper the Federal Reserve’s tapering of its bond buying program that been in place to stimulate the economy?
“It is too early to tell,” says Piegza. “We still have one more employment report before the [Fed’s] March meeting, meaning the committee will most likely look to February's employment report with increased importance and as the proverbial tie breaker between two months of [more positive] reports in October and November and the disappointing sub-200k total gain in December and January as the Fed tries to differentiate between temporary factors and underlying fundamental weakness.”
Meantime, the National Retail Federation released its 2014 economic forecast, projecting retail industry sales, excluding automobiles, gas stations, and restaurants; will increase 4.1% this year, up from the preliminary 3.7% growth seen in 2013.
Online sales in 2014 are project to grow even more, between 9% and 12%.
“Measured improvements in economic growth combined with positive expectations for continued consumer spending will put the retail industry in a relatively good place in 2014,” said NRF President and CEO Matthew Shay. “Though headwinds in the form of the looming debt ceiling debates, increased health care costs, and regulatory concerns still pose risks for both consumers and retailers, we are cautiously optimistic and hopeful that the economic tides will change in 2014.”
The group also predicts economic growth is expected to be above its long-term historical average. “Early estimates for growth in the economy as measured by real GDP could fall between 2.6% and 3%, a noticeable improvement from the estimated 1.9% rate for 2013 and the fastest pace in the past three years,” says NRF.
Other projections include:
- The labor market is expected to continue its modest recovery averaging approximately 185,000 jobs per month, helping decrease unemployment to near 6.5% or lower by the end of 2014. The latest figure from January has it a 6.6%
- Inflation as measured by the Consumer Price Index is predicted to inch higher to as much as 1.7% in 2014. The number is below the Federal Reserve’s target.
- The housing sector is expected to continue to improve in 2014,and stronger household and business confidence should spur more consumer spending overall.
Updates adds retail sales forecast.