US job engine sputters for second month

The US job creation engine sputtered for the second straight month in January, raising fresh questions about the economy’s momentum.

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The Labor Department reported Friday that the economy pumped out a net 113,000 new jobs in January, far fewer than the 175,000 that economists had forecast and even farther off the monthly average for last year of 194,000.

While hiring was strong in construction and professional services, retailers and government authorities at all levels shed significant numbers of workers, the department’s survey of business establishments showed.

It came on the heels of January’s 75,000 net hirings, which analysts had hoped was a seasonal fluke explained by severe weather conditions in much of the country.

The newest data suggested weather was not a significant factor in January.

“Folks, this isn’t good news,” said Brookings Institution economist Justin Wolfers.

“Today’s data suggest recent trends of good-but-not-great jobs growth is continuing. But they warn us to be wary of a slowdown.”

The monthly report carried a tentative silver lining.

The department’s separate survey of households showed a surge in people returning to the workforce and getting jobs: 638,000 more people had work last month over December.

That pulled the overall unemployment rate down to 6.6 per cent from 6.7 per cent in December and 7.9 per cent a year ago.

And the labour force participation rate rose to 63.0 per cent, though that remains extremely low on historical standards.

While economists give less weight to the household survey as an indication of the economy’s strength, they said it moderated the low job creation numbers from the establishment poll.

The data raised questions about whether the Federal Reserve will, or should, continue its two-month-old operation to cut back its huge bond-buying stimulus program.

Based largely on the view that the economy was growing steadily and the jobs market was firming, the Fed sliced $US10 billion ($A11 billion) from the monthly operation in January and is cutting another $US10 billion this month, bringing it to $US65 billion.

While some analysts say the January data could give them reason to pause, Fed policy makers do not meet again until March, when they will also have February’s data under their belts.