United States: Payrolls growth increase lower than expected, unemployment inches down
February 7, 2014
Non-farm payrolls grew by 113,000 in December, which was well above December's revised increase of 75,000 (previously reported: +74,000). The reading, however, fell far short of market expectations of a 180,000 increase in payrolls.
The private sector is entirely responsible for new hiring, having added 142,000 jobs in January. The largest gains were registered in the manufacturing sector and in the professional and business services sectors. Meanwhile, the public sector lost 29,000 jobs.
The U.S. economy has recovered 7.8 million jobs since February 2010, which marked the trough in the labor market crisis. Despite the ongoing improvement over the past three years, the economy still has roughly 866,000 fewer jobs than it had at the January 2008 peak.
The unemployment rate - derived from a different survey - inched down from 6.7% in December to 6.6% in January. The reading beat market expectations of no change. As a result, the unemployment rate now sits at the lowest level since October 2008. The drop in unemployment, which occurred despite payroll gains having been much lower than expected, is driven in part by the continuing decline in the labor force participation rate. The participation rate currently sits at 63.0%, which is the lowest level since 1978.
FocusEconomics Consensus Forecast panelists expect unemployment to average 6.8% this year, which is down 0.1 percentage points from last month's forecast. For 2015, the panel expects the unemployment rate to drop to 6.3%.
Author: Carl Kelly, Economist