Jobs Report May Raise Questions on Pullback of Stimulus

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from The New York Times,

Employers added jobs at a slower-than-expected pace in January, the second month in a row that hiring has been disappointing and a sign that the labor market remains anemic despite indications of growth elsewhere in the economy.

Payrolls increased by 113,000, the Labor Department reported Friday morning, well below the gain of 180,000 that economists expected. The unemployment rate, based on a separate survey of households that was more encouraging, actually fell by a tenth of a percentage point, to 6.6 percent.

The data for January come after an even more disappointing report on the labor market for December, which was revised upward only slightly Friday, to show a gain of just 75,000 jobs, from 74,000. The level of hiring in January was also substantially below the average monthly gain of 178,000 positions over the last six months, as well as the monthly addition of 187,000 over the last year.

The two weak months in a row will prompt questions about whether the Federal Reserve acted prematurely when policy makers in December voted to begin scaling back the central bank’s expansive stimulus efforts.

The new data is not expected to alter the Fed’s course, economists said, but another poor report on hiring next month might force policy makers to rethink their plan when they next meet in late March.

“In one line: grim,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics, in a note to clients Friday morning.

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