(Corrects historical on gain in construction jobs)
* Nonfarm payrolls rise 113,000 in January
* December payrolls revised up slightly to 75,000
* Unemployment rate falls to 6.6 percent from 6.7 percent
* Average hourly earnings up, work week steady
By Lucia Mutikani
WASHINGTON, Feb 7 U.S. employers hired far fewer
workers than expected in January and job gains for the prior
month were barely revised up, suggesting a loss of momentum in
the economy, even as the unemployment rate hit a new five-year
low of 6.6 percent.
Nonfarm payrolls rose only 113,000, the Labor Department
said on Friday. But with construction recording the largest
increase in jobs in almost seven years, cold weather probably
was not a major factor in January.
"It is an improvement but a number this soft does feed
worries about slowing U.S. growth," said Joe Manimbo, senior
market analyst at Western Union Business Solutions.
The second straight month of weak hiring - marked by
declines in retail, utilities, government, and education and
health employment - could be a problem for the Federal Reserve,
which is tapering its monthly bond-purchasing stimulus program.
It was the weakest two months of job growth in three years.
December payrolls were raised only 1,000 to 75,000.
U.S. stock index futures fell sharply after the report,
while prices for U.S. Treasury debt rallied. The dollar fell
against the euro and the yen.
The data also comes on the heels of a report on Monday
showing a surprise drop in factory activity to an eight-month
low in January. The economy grew at a robust 3.7 percent annual
rate in the second half of 2013, buoying hopes that it was now
on a path to sustained growth.
That optimism is being tested, with other data in January
showing slower automobile sales.
But there was a silver lining in the employment report. The
jobless rate dropped a tenth of a percentage point to 6.6
percent last month, the lowest since October 2008.
Economists polled by Reuters had forecast payrolls
increasing 185,000 last month and the unemployment rate to hold
steady at 6.7 percent.
The household survey from which the jobless rate is derived
found strong gains in employment. In addition, more people came
into the labor force, an encouraging sign for the labor market.
The participation rate, or the proportion of working-age
Americans who have a job or are looking for one, increased to 63
percent from 62.8 percent in December, when it fell back to the
more than 35-year low hit in October.
"We think the employment market is improving, but will do so
in fits and starts," said David Carter, chief investment officer
at Lenox Wealth Advisors in New York. "If the employment market
continues to weaken, it is likely that the Fed will slow its
The unemployment rate is now flirting with the 6.5 percent
level that Fed officials have said would trigger discussions
over when to raise benchmark interest rates from near zero.
But policymakers have made it clear that rates will not rise
any time soon even if the unemployment threshold is breached.
The private sector accounted for all the hiring in January.
Government payrolls fell 29,000, the largest decline since
Manufacturing employment increased 21,000, rising for a
sixth month. Retail sector jobs fell 12,900 after strong
increases in the prior months, the first decline since March.
Construction payrolls bounced back 48,000 after being
depressed by the weather in December. It was the largest
increase since March 2007.
Average hourly earnings rose five cents. The length of the
workweek was steady at an average of 34.4 hours.
Friday's report included revisions to data on payrolls, the
workweek and earnings going back to 2009.
Revisions to this data, which is drawn from a survey of
employers, showed 369,000 more jobs than previously thought were
created in the 12 months through March 2013, on a seasonally
The report also incorporated new population estimates.
(Reporting by Lucia Mutikani; Additional reporting by Michael
Connor and Ryan Vlastelica; Editing by Andrea Ricci)