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January job growth drags in the US, construction shines


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2014-02-11 11:57:18 - Retail, education and health sectors along with the government bring down hiring for the second straight month, but joblessness too shrinks, Team IFM reports

American non-agricultural job growth in January shrank beyond forecasts, official employment data released here last week showed, though hiring in the construction sector rose indicating extreme cold conditions may not have had any dampening effect as feared earlier.
Data from the Bureau of Labor Statistics showed 113,000 people were hired in the first month of this year in the US – marking the second straight month of subdued employment. Recruitment declined in retail, utilities, government, and education and health employment.
For instance, federal government employment decreased by 12,000; the Bureau said adding: “The US Postal Service accounted for most of this decline (-9,000
For those already employed, the Bureau report showed, wage growth had been dragged back to almost a flat line,

barely rising through 2013. As Ethan Harris, co-head of global economics at Bank of America Merrill Lynch, told The New York Times: “There’s almost no growth in spending power
On the brighter side of an anaemic payroll picture – unemployment rate was the lowest since October 2008 and fell to 6.6 per cent, according to the Bureau data. More people were also absorbed in the workforce, notably in the construction sector, showing the blue collar segment was slightly better off.
Yet overall, the figures disappointed, especially when seen in the backdrop of independent estimates. Payroll tracker ADP Inc had in its forecast pegged fresh recruitments at 175,000 across sectors – led by the services sector which accounted for more than 90 per cent of new jobs created.
Alongside, economists polled by Reuters had predicted new jobs to nose up to 185,000 last month and unemployment rate to hold steady at 6.7 per cent.
American manufacturing activity has been particularly hit this winter, slowing considerably in January mainly on account of severe cold weather conditions, a slowdown in securing fresh orders and inventories, economic indicators of two sets of survey data released separately early last week showed.
“Cold and stormy winter weather continued to weigh on the job numbers said Mark Zandi, chief economist of Moody’s Analytics that compiles data for ADB. “But that is not expected to continue
Labour Pains
The Bureau of Labor Statistics said total nonfarm payroll employment increased by 113,000 in January. “In 2013, employment growth averaged 194,000 per month. In January, job gains occurred in construction, manufacturing wholesale trade, and mining it said in a statement.
But despite the Bureau’s upbeat tone, the figure disappointed, as payroll tracker ADP’s monthly National Employment Report released ahead of last Friday’s government hiring data had forecast a rosier picture.
It predicted a job addition of 175,000 in January, which was much below its December initial estimate of 238,000. At the same time, it was nevertheless considerably above the disappointing 74,000 new jobs officially recorded – the smallest monthly addition to the US workforce since August.
The Bureau’s latest data matched the robust ADP predictions as far as construction was concerned. It added 48,000 jobs over the month, “more than offsetting a decline of 22,000 in December” and occurred in both residential and non-residential building segments, up 13,000 and 8,000 respectively.
Heavy and civil engineering construction also added 10,000 jobs.
Official Bureau reports said wholesale trade added 14,000 jobs in January, with most of the increase occurring in nondurable goods, which saw hiring up 10,000. Mining too added 7,000 jobs in January, compared with an average monthly gain of 2,000 jobs in 2013.
Employment in professional and business services continued to trend up in January up 36,000. The industry added an average of 55,000 jobs per month in 2013. Within the industry, professional and technical services added 20,000 jobs in January.
Leisure and hospitality employment continued to trend up over the month, making 24,000 fresh recruitments, the Bureau said, and pointed out “job growth in the industry averaged 38,000 per month in 2013
Services Letdown
The biggest letdown was by the service-providing industries. The government said employment in professional and business services “continued to trend up in January” increasing 36,000, while within the industry, professional and technical services added 20,000 jobs.
“The industry added an average of 55,000 jobs per month in 2013 it said to reflect the upswing in performance.
However, as per the ADP’s projections, the services sector added 160,000 jobs in January, down from an upwardly-revised December figure of 177,000.
The sector’s performance in the US was in alignment with that of the global scenario; according to the JP Morgan Global Services Business Activity Index, global services business activity expanded for the 16th successive month in January.
At 53.8, up from 53.5 in December, the composite index produced by JPMorgan and Markit in association with ISM and IFPSM, a union of 43 purchasing associations globally, posted a reading close to last September’s two-and-a-half year high.
JP Morgan said on Wednesday that job increases were signalled for the US apart from a host of European nations, Japan and two BRIC countries – India and Brazil.
“Although demand growth slowed, companies’ positive outlook and continued willingness to take on additional staff suggest that the upturn is likely to track at around its current rate during the coming months David Hensley, Director of Global Economics Coordination at JPMorgan, had said in a statement.
Manufacturing Wows
Manufacturing, however, surprised. Contrary to predictions, employment in manufacturing increased in January, up 21,000. Over the month, job gains occurred in machinery (up 7,000), wood products (up 5,000), and motor vehicles and parts (also up 5,000).
This compared favourably with 2013, when manufacturing added an average of 7,000 jobs per month in 2013.
In its monthly employment report, payroll tracker ADP, however, forecast job losses in manufacturing. It noted that the projected decline of 12,000 followed a revised gain of 16,000 in the prior month and was the first decline in industry payrolls since July 2013.


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Mark Miller
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