The US economy added just 20,000 jobs in January, the smallest gain in months, and a sign the workforce may have been depleted (JOE RAEDLE)
Washington (AFP) – Job creation ground to a virtual halt in the United States last month, the government reported Friday, a stinging blow to President Donald Trump’s hopes for undiminished economic growth this year.
Job creation was the slowest since September 2017, and joins widespread reports from firms nationwide complaining that worker shortages are beginning to impede growth in their businesses.
The sudden collapse in hiring showed deep job cuts in the construction retail and transportation sectors — is sure to revive worries about the dwindling supply of American workers.
Despite that the unemployment rate fell and hourly wages saw their biggest gains in nearly a decade, more evidence of the tight labor market.
US employers added just 20,000 net new positions for the month, only a fraction of what economists had been expecting, while unemployment fell two tenths to 3.8 percent, its lowest level since October, according to the closely-watched Labor Department report.
Economists had been projecting a far stronger 173,000 gain. The decline in the unemployment rate may seem contradictory to the weak job creation, but the figure also reflects a shrinking labor force.
The data can produce the occasional blip due to weather or other one-off factors and these numbers are subject to revision. Economists said the weakness may have been exaggerated after a big gain in the prior month or due to seasonal adjustment, meant to smooth out sharp swings due to weather or other expected elements.
But February marked a dizzying tumble from January’s blow-out 311,000 net new positions — a number the White House had held out as a sign that robust economic growth would continue.
– Unwelcome news –
The hiring slowdown will be unwelcome news for Trump and is like to weigh heavily on first-quarter GDP calculations, threatening to take the bloom from the economy’s rose in year’s first quarter.
The US unemployment rate has been hovering 50-year lows since last year, with a hot economy’s hunger for new employees seeming to turn up new pockets of available labor every month.
But the construction, retail, mining and transportation sectors shed a combined 45,000 positions while the education sector added only 4,000 workers, down from 64,000 the prior month.
No one was hired in February to work America’s in leisure and hospitality.
Meanwhile, average hourly wages rose 11 cents for the month to $27.66, putting them up 3.4 percent over the same month last year — more than twice as fast as inflation. That is an indication that at long last firms are being force to pay more to attract workers.
The data present a mixed bag for the Federal Reserve, which has said it will hold off on additional rate increases amid signs economic growth is moderating and the absence of inflation. But if wage gains pick up speed, it could fuel concerns of inflation hawks at the central bank.
The report was also unwelcome news to Wall Street, sending stock futures lower and setting up equities to continue losses in what has so far been their worst week of the year.
Jim O’Sullivan of High Frequency Economics agreed with others that special factors may be to blame for the sharp drop in hiring.
“The slowing may reflect some moderation in the trend, but much of it was likely due to payback for exaggerated strength, due in part to weather effects,” he said.
Others have said the five-week government shutdown — which delayed release of the jobs data — also played a role in the January spike, as idled government employees who found other jobs temporarily may have been double-counted.
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