For the second straight month, the Bureau of Labor Statistics “Employment Situation” report showed a slowdown in U.S. job creation. In December only 75,000 jobs were added, followed by January’s increase of 113,000 — both significantly lower than the 2013 average monthly gain of 194,000.
The fact is that December was the weakest month for job creation since August 2012. Employers hired fewer employees than any other month since last June, and layoffs reached a four-month high of 109,000 — which broke a three-month streak of progress. When you see this information and pair it with the tepid job creation numbers, it’s understandable why many believe that economic recovery has truly lost momentum.
But is there a silver lining in these “not-so-great” numbers? Is there something that we can feel positive about? Certainly there is.
First, the Bureau of Labor Statistics ”The Employment Situation – January 2013” report revealed that 638,000 more people said that they had work last month over December. This helped to lower the national unemployment rate to 6.6 percent, making it 1.3 percent less than what it was a year ago, and the lowest it has been in more than five years.
Second, the U.S. has seen 47 straight months of private job sector growth. The construction sector added 48,000 jobs in January, which was the single strongest month of job growth for that industry—no small feat. Additionally, the manufacturing sector added 21,000 jobs last month, which tripled the 2013 monthly average of 7,000. Many economists insist that these two industries rarely show expansion without the economy being in a strong or strengthening state.
Contrary to the positive manufacturing and construction data, many point to the retail trade sector losing 13,000 jobs as a negative sign. But it’s important to remember that in January the retail economy usually experiences a seasonal swing in employment, which indicates that temporary holiday season hiring has ceased.
Third, some are blaming the bad weather in December and January as one of the primary causes for the discouraging data. Snow and ice force some temporary layoffs and delays in beginning new projects across multiple sectors. While we will have to wait to see future data to support this theory, it is possible that a “rebound” will occur and a surge in hiring will take place. With poor winter weather showing no signs of stopping, it may take a few reports to see how the economy really is impacted by this factor.
Most experts agree that the economy is headed in the right direction. Despite recent turbulence in multiple emerging economies, the global economy appears to be in the best shape it has been in three years. In fact, most economists expect the U.S. economy to grow to 3.0 percent this year, up from 1.9 percent in 2013. Investors even shrugged off the tepid figures of the January release, producing a solid day on Wall Street, as the Dow Jones Industrial average grew 136 points in afternoon trading.
Despite the fact that the last two months have not met expectations, many economists still believe that hiring will increase as the economy continues to improve, resulting in much healthier levels of job creation in the coming months.