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		Home Page Mortgage News You Can Use Job Growth in January Disappoints Friday February 6, 5:09 pm ET By Anna Willard WASHINGTON (Reuters) - The U.S. economy created 112,000 new jobs in January, far fewer than expected, government data showed on Friday in a disappointing report that will likely weigh on President Bush's re-election campaign. The report showed hiring remains weak 26 months after the economy climbed out of recession, even though January's gain was the fifth straight monthly increase in payrolls outside the farm sector and the largest rise since December 2000. "The payrolls number was well below market expectations and confirms the jobs market in the U.S. is weak," said Daniel Tenengauzer, vice president for foreign exchange at Lehman Brothers. Analysts had expected the economy, which has been showing strength in areas other than job growth, to add 150,000 new jobs in January after an originally reported gain of only 1,000 the previous month. The Labor Department revised the December figure to an increase of 16,000. The report reinforces expectations that the Federal Reserve will leave interest rates at a 1958 low of 1 percent. HEALTHY GROWTH BUT FEW JOBS Economists say the United States needs to add 150,000 jobs a month just to keep pace with growth in the labor force and to keep the unemployment rate steady. Since September, only 366,000 jobs have been added, or just over 70,000 a month. "This is the weakest job creation rate relative to economic growth on record," said Steven Wood, an economist at Insight Economics. The economy grew at a healthy 4 percent annual rate in the final quarter of last year after a soaring 8.2 percent pace in the previous three months. January's unemployment rate ticked down to 5.6 percent, the lowest in two years, from 5.7 percent in December. Analysts had been looking for the unemployment rate to hold steady. The payrolls data is taken from a survey of employers, while the jobless rate is derived from a separate, smaller survey of households. The dollar lost more than 1 percent against a range of currencies as investors bet the Fed would refrain from raising interest rates. Stocks also rallied as the data eased fears of a rate hike. The Dow Jones industrial average ( ^DJI - News ) ended the day up 97.48 points, or nearly 1 percent, at 10,593.03, while the technology-heavy Nasdaq (NasdaqSC: ^IXIC - News ) added 2.2 percent and the broader S&P 500 (CBOE: ^SPX - News ) gained 1.26 percent. U.S. Treasury bond prices jumped on the report's implications for the Fed. A revival in the jobs market is seen as crucial for a sustained economic recovery and the central bank is expected to keep rates on hold until signs of this emerge. "These numbers will not change the Fed's thinking," said Rick Egelton, deputy chief economist at BMO Financial Group. "The Fed is on hold for the time being." Fast productivity growth has been partly blamed for the weak jobs picture because it allows companies to make do with fewer employees. JOB ISSUE LOOMS IN ELECTION The weak labor market is expected to be a major issue in the presidential election. Since Bush took office, 2.2 million jobs have been lost and his opponents say his economic policies have helped the wealthy and done little to create jobs. "This president's economic policies are not working," said Democratic presidential hopeful Sen. John Edwards. "The one thing we haven't tried should happen in November: changing these policies by firing George Bush ( News ) ." But the White House defended its record. "Today's report is another sign that the economy is continuing to grow strong and that jobs are being created," White House spokesman Scott McClellan told a news briefing. Many of the new jobs in January came from a 76,000 increase in the retail sector. The Labor Department said some retailers took on fewer employees than expected in November and December for the holiday season. This meant they did not shed as many afterward, affecting the seasonal adjustment factor. The troubled manufacturing sector cut jobs for the 42nd month in a row, despite some signs of a revival in factories seen in other economic data. Employment in temporary help services fell for the first time since April 2003. Economists say temporary hiring often rises ahead of more-permanent hiring. The report included annual benchmark revisions, but these did not lead to a major change in the overall picture of a weak jobs market. The Labor Department defended the accuracy of the employment count based on its survey of payrolls, disputing criticism the poll fails to capture jobs created by new businesses. One bright spot in the report was a 24,000 increase in construction jobs, amid low mortgage rates that have helped to fuel a housing boom. In another encouraging sign for job seekers, hours of work rose to 33.7 per week from 33.5 in December. Employers often lean more heavily on existing employees before hiring more.   Back to Original Article: Mortgage News You Can Use   Continue with: US TREASURY OUTLOOK-Greenspan testimony, Treasury refunding Stocks Could Slip as Earnings Taper Off Time to Be Choosy as Rally Stalls EARLY STAGES OF RECOVERY
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