The U.S. economy added fewer jobs than forecast in January, restrained by a decline in factory
employment. The jobless rate declined to 5.6 percent.
Payrolls rose 112,000 during the month, the Labor Department said. While the gain last month was the most in three years, payrolls rose an average 196,800 a month during the record 10- year expansion that ended in March 2001. Federal Reserve policy makers said they will be “patient” before raising interest
rates, noting “subdued” job creation.
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“To have a sustained economy we must have more than 110,000 jobs created a month,” said Alan Blinder, a Princeton University economics professor and former Fed vice chairman. Companies “are
strangely hesitant to hire given the strong growth in the economy.”
More job growth may be needed to raise incomes, helping boost spending and the economy. Democrats, looking to defeat President George W. Bush in November, have argued his economic
policies are doing little to stimulate job growth. More than 2 million jobs have been lost since Bush took office.
Treasury Secretary John Snow seized on the drop in the unemployment rate and said in a statement that Bush’s tax cuts continue to “boost economic activity and improve the environment for job creation.”
The construction and retail industries added workers in January. The jobless rate was the lowest in two years and down from 5.7 percent in December.
There’s just not a lot of stimulus out there on the job front,” said Tom Hill, chief executive of CRH Plc’s Oldcastle Materials Inc., in an interview. Oldcastle, headquartered in Washington, is the largest U.S. producer of asphalt. “We’re doing more with less.”
“It is a more cautious environment than I’ve ever seen in my business career,” said John Chambers, chief executive at Cisco Systems Inc., the world’s largest maker of equipment to link computers, in a radio interview Tuesday with Bloomberg News.
Economists had expected payrolls would rise by 175,000 last month after a revised December gain of 16,000, according to the median of 69 forecasts in a Bloomberg News survey. Labor previously estimated a December rise of 1,000. Economists projected the unemployment rate would hold at 5.7 percent.
“While this report was not as shockingly weak as December’s, it nonetheless drives home the weakness of the employment recovery,” said Chris Low, chief economist at FTN Financial in New York. Low had forecast a 200,000 rise. “The Fed is not going to raise rates if there’s sub-par job growth.”
Bloomberg News
Consumer Borrowing
Consumer borrowing increased $6.6 billion in December, more
than three times as much as in the previous month, Fed figures
showed. Spending exceeded income growth in December, according to
the latest Commerce Department data, prompting Americans to
charge more on credit cards. They also borrowed to buy new
vehicles during the month.
The Treasury’s 4 1/4 percent note maturing in November 2013
