Payrolls in the U.S. rose less than projected in January as retailers cut back after the holidays and government hiring fell. The unemployment rate unexpectedly declined to 6.6%.
The 113,000 gain in employment followed a 75,000 increase the prior month, Labor Department figures showed today in Washington. The median forecast of economists in a Bloomberg survey called for a 180,000 advance. The unemployment rate dropped to the lowest level since October 2008 even as more Americans entered the labor force.
Retailers and government agencies cut payrolls by the most in more than a year, while construction firms and manufacturers boosted employment. Stocks climbed on speculation the report may prompt the Federal Reserve to wind back stimulus at a slower pace.
“It’s another disappointment, but it’s not anything disastrous,” said Julia Coronado, New York-based chief economist for North America at BNP Paribas and a former Fed economist, who accurately forecast the jobless rate. “We’re still in muddle-along territory rather than take-off mode. There isn’t the kind of momentum in hiring.”
The Standard & Poor’s 500 Index rose 0.5% to 1,782.04 at 9:31 a.m. in New York. The yield on the 10-year Treasury note was little changed at 2.70%.
Private employment, which excludes government agencies, rose by 142,000 in January after 89,000 the prior month. The Bloomberg survey median called for a 185,000 advance.
Broad-based improvement in job growth is needed to help generate bigger wage gains and spur the consumer spending that accounts for almost 70% of the economy.
Shari Adams is among those looking for work after being dismissed in July 2013 from her job as a controller at a nonprofit firm.
“It’s a roller-coaster ride,” the 45-year-old from Richmond, Virginia, said. “There are definitely more opportunities” for work. “There’s also a lot of competition.”
Department-store chains were among companies announcing workforce reductions last month after the holiday-shopping season. Macy’s Inc. said it would eliminate about 2,500 jobs and close five stores, while J.C. Penney Co. plans to cut about 2,000 positions and shutter 33 locations.
Today’s report showed 262,000 Americans were not at work because of inclement weather in January, little changed from the same month last year, suggesting conditions played a more limited role than in December. In the Jan. 10 release of the prior month’s data, the Labor Department had said poor weather kept 273,000 people from work, the most for any December since 1977.
More than half the gain in January employment came from the construction and manufacturing industries, while payrolls among service producers slowed.
Revisions to prior reports added a total of 34,000 jobs to payrolls in the previous two months. Estimates of 92 economists in the Bloomberg survey for January employment ranged from gains of 105,000 to 270,000. The gain for December was revised from a previously reported 74,000. Jobless Rate
The unemployment rate, which is derived from a separate Labor Department survey of households than the payrolls tally, was projected to hold at 6.7%, according to the survey median.
Economists’ forecasts for the January report varied based on their assumptions for effects such as the inclement weather and the expiration of emergency unemployment benefits.