The U.S. economy created a disappointing 113,000 new jobs in January, the Labor Department reported Friday. Analysts expected nonfarm payrolls to increase by 185,000 jobs last month.
The unemployment rate fell again to 6.6 percent. the lowest level since October 2008 even as more Americans entered the labor force. Unemployment has fallen from a post-recession high of 10 percent, reached in October 2009. In December, it fell steeply to 6.7 percent from November's 7.2 percent.
January's disappointing results compounded a weak report in December when a much-lower-than-expected 74,000 jobs were created. It was revised upward by just 1,000 jobs Friday.
Retailers and government agencies cut payrolls by the most in more than a year, while construction firms and manufacturers boosted employment. Broad-based improvement in job growth is needed to help generate bigger wage gains and spur the consumer spending that accounts for almost 70 percent of the economy.
"We're making progress but the progress is still slow," Stephen Stanley, chief economist at Pierpont Securities in Stamford, Conn., said before the report. On many fronts, "the labor market isn't performing in a way that is satisfactory. We've had decent job growth but not a sustained period of strong job growth."
The so-called participation rate rose to 63 percent from 62.8 percent even as more people entered the labor force.
Friday's report showed factory payrolls increased by 21,000, following an 8,000 increase in the previous month. Economists had projected a 10,000 advance.
Construction companies added 48,000 workers in January after reducing employment by 22,000 a month earlier.
Employment at private service-providers increased 66,000 last month, a slowdown from the 102,000 jobs added a month earlier. Retailers reduced payrolls by about 13,000, the most since June 2012.
Department-store chains were among companies announcing workforce reductions last month after the holiday-shopping season. Macy's said it would eliminate about 2,500 jobs and close five stores, while J.C. Penney plans to cut about 2,000 positions and shutter 33 locations.
Employment in education and health services dropped 6,000 in January, the most since September 2004, after a 4,000 decline at the end of 2013.
Government employment slumped 29,000 in January, the most since October 2012 as all levels of government reduced employment.
The Labor Department Friday also issued its annual benchmark update, which aligned employment data spanning from April 2012 to March 2013 with corporate tax records. The revision showed payrolls grew by an additional 347,000 workers, on an unadjusted basis, in that period as workers providing services for the elderly and those with disabilities were reclassified to a category now captured in the establishment survey.
Additionally, the agency incorporated new Census Bureau population estimates into the household survey it uses to calculate the jobless rate. The adjustment boosted the estimated size of the labor force by 523,000.-- Bloomberg News contributed to this report.