U.S. employment rose far less than expected in January, partly the
result of severe snow storms that slammed large parts of the nation, but
the unemployment rate fell to its lowest level since April 2009. KEY POINTS: Nonfarm
payrolls grew just 36,000, the Labor Department said on Friday, far
less than the 145,000 increase that economists had expected. The
government noted that severe weather could have affected construction
payrolls, which dropped 32,000 last month. There were also large
declines in the employment of couriers and messengers. The modest
jobs gains are at odds with other data for January, which had suggested
employment growth was picking up and had raised hopes that the
manufacturing-driven recovery was now spreading to other sectors of the
economy. ERIC TEAL, CHIEF INVESTMENT OFFICER AT FIRST CITIZENS BANCSHARES INC., RALEIGH, NORTH CAROLINA: "The
number is disappointing, but when we get disappointing numbers it
permits investors to see an ongoing continuation of accommodative
monetary policy. That is why the market is probably not showing much
reaction to the poor news. There is a silver lining to some of the
negative economic numbers. "We think that (a third round of
quantitative easing) is highly unlikely at this point, given the changes
we saw in the midterm elections. But it does beg the question of
whether the economy is sustainable after QE2 expires. I think it could
be several years before we start seeing real job improvement and the
unemployment rate below 8%. The problem is structural in nature,
especially around the real estate and construction sectors." JOSEPH TREVISANI, CHIEF MARKET ANALYST, FX SOLUTIONS, SADDLE RIVER, NEW JERSEY: "An
extremely weak unemployment report should not be deceived by the drop
in the unemployment rate to 9%. This is a very poor report. This will
not have much affect on the dollar because the dollar is focused on
events in the Middle East and Europe. Everything is event risk. The
dollar is probably going to strengthen next week on the continuing
turmoil in Egypt and the unwillingness of the European Central Bank to
target inflation." DAVID SLOAN, ECONOMIST, IFR ECONOMICS, A UNIT OF THOMSON REUTERS, WASHINGTON, D.C.: "Given
the mixed breakdown and snowstorm that hit in the survey week, we
should probably not make strong conclusions on the unexpected weakness
of the payroll regarding the underlying pace of activity. "January
data may be on the low side of trend, but manufacturing looks set to be
an important exception on the upside. A weather influence is hinted at
by construction being particularly weak with a 32k fall in jobs, the
steepest of 5 straight declines, and also by the sector leading the fall
in the workweek in falling to 37.3 from 38.1 hours, while manufacturing
rose to 40.5 from 40.4 and private services were steady at 33.2. It
should however be noted that housing is a weak sector even beyond the
weather effects. ... Given the mixed breakdown in this report, and
positive signals in other data, it appears likely that without the bad
weather, the January payroll would have been significantly stronger than
this +36k outcome."
" USD- NFP come out weak, yet Unemployment rate drops to 9.0% for the month of December .."..
" CAD- Job numbers increased, Unemployment rate numbers disappoint ".....
U.S. employment rose far less than expected in January, partly the
result of severe snow storms that slammed large parts of the nation, but
the unemployment rate fell to its lowest level since April 2009.
Nonfarm payrolls grew just 36,000, the Labor Department on Friday, far less than the 145,000 increase that economists had expected.
The government noted that severe weather could have affected
construction payrolls, which dropped 32,000 last month. There were also
large declines in the employment of couriers and messengers.
“My view is that the storms interrupted the hiring process. They have
not diminished the demand for labor, but made it that much more
difficult for both the job seekers and employers to consummate the
hiring transaction,” said Patrick O’Keefe, head of economic research at
J.H. Cohn in Roseland, New Jersey, before the data was released.
The modest jobs gains are at odds with other data for January, which had
suggested employment growth was picking up and had raised hopes that
the manufacturing-driven recovery was now spreading to other sectors of
the economy.
Despite the small increase in payrolls, the jobless rate, which is
calculated from a separate survey, fell to 9.0 per cent from 9.4 per
cent in December. The decline is unlikely to discourage the Federal
Reserve from completing its $600-billion government bond-buying program
to support the economy.
The government revised November and December payrolls to show 40,000 more jobs created that previously estimated.
The labor market has lagged the broader economy, which grew at a 3.2 per
cent annual rate in the fourth quarter. Fed Chairman Ben Bernanke on
Thursday acknowledged the pick-up in the recovery, but said “it will be
several years before the unemployment rate has returned to a more normal
level.”
The payrolls data comes from a survey of businesses, while the jobless
rate is determined by a survey of households. The January household
survey also reflects population changes, which makes it difficult to
determine why the jobless rate fell.
A department official also said 886,000 people in the survey said they did not work in January because of severe weather.
The Labor Department also finalized its annual benchmark revisions to
its payroll series, which showed the level of employment for March 2010
was revised down by 378,000.
Last month, the private services sector added only 32,000 jobs after
increasing 146,000 in December. The sector accounts for more than 80
percent of jobs in the United States.
Payroll increases in goods-producing sectors rose 18,000, as
manufacturing employment grew 49,000, the largest increase August 1998,
after rising 14,000 in December.
Government payrolls dropped 14,000 in January, marking a third straight
month of declines, pulled down state and local governments.
The Canadian economy churned out a better than expected 69,200 jobs last month, as the business services and agriculture sectors along with public sector added to payrolls.
Despite the gains, the unemployment rate rose to 7.8 per cent in January
from 7.6 per cent a month earlier as more people searched for work,
Statistics Canada said Friday.
Finance Minister Jim Flaherty said this week he expects “resistance” to
the unemployment rate coming down as some employers remain reluctant to
hire. Before January, Canadian employers had been hiring at a slow but
steady pace. The country’s jobless rate remains well above pre-recession
levels of about 6 per cent.
Friday’s report shows hiring perked up decisively in January. “This was
still a very healthy month for job creation, and another piece of
evidence that the sluggish growth we saw back in the third quarter is
now well behind us,” said Avery Shenfeld, chief economist at CIBC World
Markets, in a note.
Part-time and full-time employment were evenly split in January. Over
the past year, employment grew by 91,000 positions while higher-paying
full-time jobs rose by 236,000.
January’s gains were spread fairly evenly among the private sector,
public sector and the self-employed. Over the past year, the public
sector has led growth, with a 3.4-per-cent increase, while the private
sector has grown 2.5 per cent. Self-employment has fallen by 2.3 after a
surge during the recession.
Public-sector gains might not last. “The public sector very possibly
accounted for two-thirds of the rise,” said economists at Bank of Nova
Scotia. “One has to question the sustainability of this effect going
into a period of fiscal consolidation that the U.S. may have postponed
but Canada has not.”
Among provinces, employment rose in Ontario, Alberta, Nova Scotia,
Newfoundland, Manitoba and Prince Edward Island. In Ontario, employment
rose for the third straight month, though the unemployment rate held
steady at 8.1 per cent.
Alberta employment jumped by 22,000 in January and has climbed by 44,000
in the past year. Still, the province’s jobless rate rose to 5.9 per
cent last month as more people looked for work.
Economists had expected 15,000 new jobs would be added with the rate remaining at 7.6 per cent.
Most employment gains in January were among women over the age of 25.
And while most demographic groups have seen job gains over the past
year, youth have not. The youth jobless rate rose to 14.4 per cent last
month from 13.8 per cent.
Among sectors, business, building and other support services added
34,000, bouncing back from December. Public administration created
20,000 jobs and agriculture rose by 13,000.
Manufacturing employment was little changed in January after a jump of 66,000 in the prior month.
Employment fell in transportation and warehousing along with
accommodation and food services in January. Employment has fallen by
37,000 in the hospitality sector in the past year.
The jobs market has added 327,000 positions in the past year.
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