January Non-Farm Payrolls Up 157,000; Jobless Rate 7.9%

WASHINGTON — The January employment report shows a still-slow-growth economy, and perhaps more important for Fed watchers, suggests that improvement in the unemployment rate stalled in fall 2012.

January employment data overall came in about as expected, with payrolls up 157,000 and the unemployment rate up 0.1-point to 7.9%.

The payroll benchmark was up 422,000 jobs in March 2012 (a 424,000 rise prior to seasonal adjustment), mainly added in winter/fall. This was up from the 386,000 increase in the preliminary estimate, but remains "about average" for this annual practice at 0.3% (the Bureau of Labor Statistics said that the average benchmark revision over the last 10 years without regard to sign was 0.3-point).

After the benchmark, it was little surprise that November-December job creation looks better with a net upward revision of 127,000 jobs. The average job gain in 2012 is now 181,000 a month — so a key take-away is that January jobs, the first reading in Q1:2013, slowed in this first estimate.

Given the massive 2.84 million monthly seasonal adjustment factor used in computing the January change in payrolls, one would be inclined to say January's 157,000 job gain is about normal. There certainly was no sign of the sometimes-massive miss versus analysts' expectations (the median estimate in the MNI poll was a 160,000 rise in January jobs).

The unemployment rate decline stalled in September in the latest data. Population controls, an annual exercise in reconciling the employment report to Census data, showed there was a 136,000 gain unadjusted December addition to the labor force but 127,000 of these people were employed. Unadjusted the labor force was upped 1.3 million for the year. These changes had little effect on the unemployment rate.

Earnings were up and hours down, suggesting mixed income and production data ahead. A Bureau of Labor Statistics economist suggested the early bout of winter flu could have accounted for the disparity — some hours were missed but many firms paid workers anyway.

The January jobs composition included: manufacturing up 4,000, construction 28,000 higher, retail rose 32,600 (a 592,000 decline unadjusted, mainly at clothing and general merchandise stores), transportation fell 14,200, wholesale rose 14,800 (mainly in nondurables), temporary help slid 8,100, healthcare an about-average gain of 22,800, and government dropped 9,000 (split between dips in Federal and local education). 

Bottom line: January data show the U.S. economy is not surging, rather just growing slowly.

Market News International is a real-time global news service for fixed-income and foreign exchange market professionals. See www.marketnews.com.

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