US job creation slows along with jobless rate

US job creation slowed sharply over the past two months, turning in the weakest performance in three years. At the same time, however, the unemployment rate hit a new five-year low of 6.6% in January.

The Jekyll and Hyde report from the Labour Department yesterday whipsawed US markets in early trade. Many economists cautioned against reading too much into it given the extreme weather that has hit much of the nation this winter.

Nonfarm payrolls rose only 113,000 last month after a meager 75,000 gain in December.

Economists had expected payrolls to rise 185,000 in January and had looked for a big upward revision to December that failed to materialise.

There were strong gains in the construction sector, and while a survey of households found 262,000 Americans were unable to work due to the weather, the department said that was in line with historical trends. The second straight month of weak hiring could be a problem for the Federal Reserve, which is tapering its monthly bond-purchasing stimulus programme.

However, its next policy-setting meeting is not until March 18-19. By then, the economic clouds may have cleared.

US stock futures initially dropped on the payrolls figures, but the market opened higher. Similarly, money flooded into the bond market but quickly reversed, as did a decline in the dollar against the euro.

— Reuters