U.S. payrolls grew in January by 112,000 jobs, the fastest clip in three years, but short of the 160,000 economists had been expecting. The unemployment rate dropped to 5.6%.

The U.S. Labor Department said this morning that employment grew by 112,000 new positions last month, lowering the jobless down by 0.1 percentage point from December to its lowest level since October 2001.

The January jobs increase marked the fifth straight monthly increase in employment, the U.S. government said.

TD Bank suggests that the U.S. labour market is “slowly finding its feet”, but it agrees that the January report was disappointing. “All told, financial markets did not receive the best of news on the job front today, but it is a definite step in the right direction.”

“The U.S. employment report remained pathetic,” declares BMO Nesbitt Burns. “There is no reason in this report for the Fed to get interested in near-term tightening. So, we are left right where we were — most other job statistics are stronger than these official numbers, and the Fed is on hold.”