Economists React: For Economy ‘Winter From Hell’ by Elaine360

It was the second straight month of weaker-than-expected job growth, with December’s number revised up a bit to 75,000. Economists disagreed about whether the weather played a role, and some found silver linings in Friday’s report.

A weak start to the year with back-to-back disappointing employment reports in December and January suggesting momentum in the labor market has waned. While weather may have slowed consumer foot traffic at points during the month or impeded manufacturing capacity in parts of the country, goods production hiring improved at the start of the year, making it difficult to blame weather for the headline weakness. –Sterne Agee Chief Economist Lindsey Piegza

In short, another weaker-than-expected report for payrolls, and the details do not suggest that weather was the reason. Beyond weather, there are plenty of other sources of volatility, especially in a month with a 3-million swing in the seasonal factor. Other data, such as claims and the ISMs, have not suggested any sudden weakening in the trend. We still expect catch-up in coming months. – High Frequency Economics Chief U.S. Economist Jim O’Sullivan

When the economy finally manages to dig out from an unusually snowy and cold winter, activity may strengthen. – Interactive Brokers Chief Market Analyst Andrew Wilkinson

This has been the winter from hell for the economy and the frigid cold, ice and snow have taken its toll. –Naroff Economic Advisors President and Chief Economist Joel Naroff

There was little evidence of a weather disruption as construction hiring rebounded to a robust 48k from a 22k decline in December and manufacturing was also solid adding 21k after an 8k increase. … Given the broader set of labor market indicators we think that the real picture of the US economy and labor market conditions is still one of chugging along, a disappointment to expectations of a take off that had built around year end but hardly a disaster. – BNP Paribas Chief Economist for North America Julia Coronado

Grim, but seasonals may have played a role. … The payroll rebound clearly is disappointing; none of ground lost in Dec was recovered. And with the household survey – NOT directly comparable to payrolls, but it’s all we have – showing 157K fewer people than usual kept away from work by the weather, it is hard to pin the blame on the severe winter.  The seasonal adjustment, however, was very unhelpful relative to Jan last year, for reasons which are not clear.  Had last year’s Jan seasonal factor been used this year, private payrolls would have risen by 265K. – Pantheon Macroeconomics Chief Economist Ian Shepherdson

Housing was a clear bright spot in today’s jobs report: more construction jobs, higher young-adult employment, and strong job growth in clobbered metros. –Trulia Chief Economist Jed Kolko

Outside of the disappointment on the headline payroll front, and especially the weak performance in service sector employment, the underlying guts of this employment report were unusually strong. The report showed broad-based improvement in a variety of ancillary labor market indicators – pointing to a reduction in labor market slack. For the Fed, this report will confirm their current bias for reducing the pace of asset purchases, consistent with their expectations for the strong momentum in economic activity during the last six months of the year to be sustained in 2014. And as the weather distortions in the data begin to dissipate, we expect the tone of economic data to improve. –TD Securities Deputy Head of U.S. Research and Strategy Millan Mulraine

Since the Fed sets its policies based on the unemployment rate, this report is unlikely to derail the tapering of the Fed’s QE program — although the tapering process could be slowed down, if February job gains are also weak. – Prestige Economics President Jason Schenker

We suggest looking at 12-month average trends in the household survey because of the monthly volatility in the report and we note that the number of unemployed has dropped by 2.1 million since January 2013, while employment has risen by 1.8 million. This suggests the drop in the unemployment rate from 7.9% to 6.6% is not just a result of falling participation.

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