The Labor Department's jobs report disappointed for a second consecutive month Friday, bringing the news that the U.S. created just 113,000 jobs in January, as the unemployment rate fell to 6.6 percent.
December's even weaker job report was little revised, from 74,000 to 75,000.
Friday’s jobs number fell short of expectations, which were for 180,000 new jobs and the unemployment rate to hold steady at 6.7 percent
The report contained few indications, however, that the drop in the unemployment rate in January was due to out-of-work Americans continuing to quit the job hunt and leave the ranks of those counted as unemployed in the Bureau of Labor Statistics' survey. The labor force participation rate ticked up from a multi-decade low of 62.8 percent to 63 percent. A broader rate of unemployment, which reflects those forced into part-time work or only marginally attached to the labor force, fell from 13.1 to 12.8 percent.
U.S. job creation has remained tepid but resilient throughout the recovery, but has dipped noticeably in recent months. Over the past three months, an average of roughly 155,000 jobs have created each month. And in the past year, monthly job gains have averaged just over 193,000, following revisions released Friday, slightly higher than the roughly 180,000 average since the economy stopped shedding jobs in late 2010.
Overall, the report contained mixed signals about the strength of the job market coming from the two surveys used — one of businesses and one of households.
While the headline jobs number from the survey of businesses was disappointing at just 113,000, the total employment increase in the household survey was a strong 616,000. That jobs number accompanied a 499,000 increase in the labor force and a rising employment-to-population ratio. The number of long-term unemployed (those out of work for 27 weeks or longer), also taken from the household survey, fell by 232,000 to 3.6 million.
Hourly wages edged up from $24.16 to $24.21, and weekly hours were steady at 34.4.
The Federal Reserve, which is tapering its monthly stimulative bond purchases, views the unemployment rate as the single most important indicator of the economy's health. Earlier in the week, Atlanta Fed President Dennis Lockhart said that it is “reasonable to expect a progression” of reductions in the Fed's quantitative easing similar to the $10 billion decreases that have come in the Fed's past two meetings. Nevertheless, the Fed's Federal Open Market Committee has said in its recent statements that “asset purchases are not on a preset course, and the committee's decisions about their pace will remain contingent on the committee's outlook for the labor market and inflation.” The FOMC will not have its first meeting under new Chairwoman Janet Yellen until March, after the February jobs report has been published.
The Congressional Budget Office published an estimate on Tuesday that the labor market is 6 million jobs short of full health. In the Hamilton Project's separate calculations, it will take almost six years for the economy to recover its pre-recession health at the current pace of job creation.