Private payrolls expanded by a less-than-expected 166,000 in January on a seasonally adjusted basis, the Labor Department reports. Last month’s level of jobs creation represents a considerable slowdown from December’s upwardly revised 202,000 rise. The annual pace of growth has also slipped, with a 1.9% gain in private payrolls for last month vs. the year-earlier level. For comparison, private payrolls gained 2.0% on the year through December. Overall, today’s employment report reminds that the labor market continues to expand slowly. The trend isn’t impressive, at least not relative to what’s needed to boost the economy to a substantially higher level of growth. But today’s jobs report is still far from fatal as it relates to assessing the business cycle.

As always, the question is whether the sluggish growth rate for payrolls can persist? The annual trend through January has clearly decelerated, but only marginally. The current 1.9% increase looks modest next to the recent highs of 2.5% from a year ago. But a 1.9% year-over-year growth rate for private payrolls—if we can keep it—is hardly the end of the world. Indeed, a 2% annual pace, give or take, was the upper range for a period before the Great Recession hit. That was also a time when worries about labor shortages were openly discussed. Same rate of increase, different macro context.

In any case, no one will confuse a 1.9% pace of jobs growth as sufficient in 2013. But it’s a stretch to say that the labor market’s capacity for expanding has fallen off a cliff. The danger sign at this point would be a consistently falling pace of growth. The January rate of increase for private payrolls looks a bit wobbly on that front—the 1.9% annual rise is the slowest since June 2011. If in, say, March or April we’re at 1.5%, it’ll be time to worry. But not yet. For now, we’re talking a marginally lesser rate, and one that’s still quite respectable in the grand scheme of history and so it’s premature to argue that we’ve reached a turning point for the worse.
While we’re looking in the rearview mirror, let’s recognize too that the Labor Department’s annual benchmark revision tells us that jobs growth in the final months of 2012 was stronger than originally reported. “The U.S. labor market has been very resilient in recent months,” Harm Bandholz, chief US economist at UniCredit Group, tells Bloomberg. “The big story is all the upward revisions to the previous months, which gives the report a real positive spin. All these concerns that the fiscal uncertainty deterred businesses from hiring, they certainly haven’t materialized.”