The U.S. economy resumed adding back more jobs than it lost
in January, as easing stay-in-place restrictions and fiscal stimulus measures
out of Washington alleviated some of the pressure on the labor market. However,
the number of jobs regained fell short of expectations, and the number of jobs
lost in December was revised to be greater than previously reported.
The U.S. Department of Labor released its monthly jobs
report Friday morning at 8:30 a.m. ET. Here were the main results expected from
the report, compared to consensus estimates compiled by Bloomberg:
- Non-farm payrolls: +49,000 vs. +105,000 expected
and a revised -227,000 in December
- Unemployment rate: 6.3% vs. 6.7% expected and
6.7% in December
- Average hourly earnings, month-over-month: 0.2%
vs. 0.3% expected and a revised 1.0% in December
- Average hourly earnings, year-over-year: 5.4%
vs. 5.0% expected, 5.1% in December
Friday’s reported also reflected downward revisions to the
previous two months’ payrolls. November’s non-farm payrolls were revised down
by 72,000 to 264,000, and December’s change was revised down by 87,000 to a
loss of 227,000 jobs. To that end, some speculated that the jobs report could
bolster the case for additional fiscal stimulus to support the virus-stricken
economy. President Joe Biden said on Friday that the data warranted a more
aggressive Congressional response via virus-relief aid.
And while the unemployment rate unexpectedly declined in
January, the drop coincided with a tick lower in the labor force participation
rate.
In January, the badly beaten-down restaurant and travel
industries shed more jobs, adding to steep December losses. Leisure and
hospitality jobs dropped by 61,000 in January, following a plunge of more than
500,000 at the end of last year. That left the leisure and hospitality with a
total deficit of more than 4 million jobs since before the pandemic, comprising
a significant portion of the nearly 10 million jobs lost on net since February
2019.
Some other industries reversed some recent gains. Retail
trade payrolls fell by 37,800 after gaining 134,900 in December around the
holidays, and healthcare and social assistance payrolls fell by more than
40,000 after gaining nearly that amount in December. In the goods-producing
sector, manufacturing jobs fell by 10,000 after increasing by 31,000 in
December.
“The details were weaker than the headline figures suggest.
Whereas the downwardly-revised 227,000 fall in payrolls in December was driven
entirely by the leisure and hospitality sector, the weakness last month was
more widespread,” Andrew Hunter, senior U.S. economist for Capital Economics,
wrote in a note Friday.
Other industries, however, extended job gains. Notably,
professional and business services added nearly 100,000 jobs after adding back
156,000 in December. And wholesale trade payrolls rose by more than 14,000
after a rise of 15,500 in December.
Other measures in the January jobs report pointed to some
stabilization in labor market conditions. The number of so-called permanent job
losers held steady at about 3.5 million in January, though that remained 2.3
million higher than from February 2019. And the number of individuals on
temporary layoffs decreased in January to 2.7 million, coming down
precipitously from a pandemic-era high of 18.0 million from April.
A number of other new economic data topped expectations this
week, offering hope of a stronger and faster than expected labor market
recovery. ADP reported that private payrolls jumped by 174,000 in January, or
more than double the consensus estimate, and new weekly jobless claims improved
to a two-month low at the end of January.
Still, the timing of the survey period for the monthly
January jobs print may mean that Friday’s report understated the degree of
improvement in the labor market in just the past few weeks. The survey week for
the monthly jobs report took place during the week including 12th of the month,
or around the time when initial jobless claims spiked to a five-month high of
more than 900,000. Claims have since retreated from those levels.
“Hiring will pick up as restrictions are relaxed but gains
will be stronger once the economy can fully reopen,” Rubeela Farooqi, chief
U.S. economist for High Frequency Economics, said in an email Friday. “Until
then, generous fiscal support will provide a safety net for households and
businesses.”
Click here for the
original article.