Healthcare, Temp Offer Little Help To Disappointing January Job Growth

Feb 7, 2014

Econ data Jan 2014Neither temp staffing nor healthcare could save January from posting disappointing job growth numbers, as the government released its second consecutive monthly report of anemic job improvement.

The Department of Labor’s monthly jobs report, issued this morning, said 113,000 new jobs were created during the month, some 70,000 below predictions.

Adding to the gloomy news, the report upped December’s initial job count of 74,000 by a mere 1,000 jobs. A revision to the November numbers did better, adding 33,000 to 241,000 previously reported.

The government’s Bureau of Labor Statistics, which compiles the monthly jobs and employment data, also issued annual revisions for all of 2013,  adding 87,000 new jobs to the cumulative 2.038 million reported during the year. If it hadn’t been for the expectation the revision would be far higher — to 345,000 — that might have been considered good news.

Healthcare, a robust growth area for the past several years, is showing signs of slowing. In December, the sector added only 2,400 jobs. In January, jobs dropped slightly, by 400. Hospitals and nursing homes were the cause of the drop, shedding a combined 9,400 jobs, which the increase in other areas wasn’t enough to cover.

Staffing, another strong growth added 8,100 new jobs.

One bright spot: the unemployment rate ticked down to 6.6 percent, even as the report revised up the size of the labor force by almost half-a-million workers. The labor force participation rate increased to 63 percent, an improvement, but still the lowest rate in more than 3o years. (Some previous decreases in the unemployment rate were caused as workers left the labor force through retirement or simply quit looking for work.)

Kathy Bostjancic, director of macroeconomic analysis at The Conference Board, looked for some positive indications in the report, observing,

There is no doubt that inclement weather in December played a role, although construction jobs held up reasonably well in January. We expect that an eventual return to more normal weather conditions will allow job gains to rebound back towards their previous 180,000 – 200,000 trend pace.

Still, she said two months of anemic job growth, “likely sparks uncertainty about the strength of the labor market and direction of the overall U.S. economy.”

Money Manager Tim Hartzell, chief investment officer at Sequent Asset Management, told Bloomberg News, “I’m encouraged by the fact that we’re probably going to say there was a weather impact again in this report.”

However, John Lonski,Team Managing Director for the Economics Group at Moody’s Analytics, which partners with ADP on the National Employment Report, discounted the weather explanation. “The average job loss due to bad weather in January in the household survey (a part of the BLS report) is 419,000, but what they claim we lost was 40% less this January,” he said, pointing out that construction jobs grew during January, something not much seen in bad weather months.

According to this morning’s report, construction jobs grew very strongly, adding 48,000 new workers during the month. Other strong growth areas were:

  • Manufacturing +21,000
  • Leisure and hospitality +24,000
  • Employment services +11,900, with temp staffing up by 8,100 jobs
  • Transportation and warehousing +9,900
  • Mining +7,200

Sectors losing jobs were:

  • Government -29,900, with the federal government shedding 12,000.
  • Retail -12,900
  • Finance and insurance -7,500

SHRM”S LINE report for February predicts that hiring will be better this month, with the service sector up 11.7 points over February a year ago. Manufacturing will improve, but just barely.  Says SHRM, “In February, hiring rates will increase and layoff rates will fall in manufacturing and services compared
with a year ago.”

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