The labor market seemed to weather the omicron variant of COVID-19 pretty well in January, with the economy adding 467,000 jobs—a surprise to forecasters who had been bracing for a much smaller gain or even a loss.
- The economy added 467,000 jobs in January, far more than economists had forecast.
- It was the smallest gain since September, but given the low expectations, economists said it showed how well the U.S. has weathered the the omicron surge in coronavirus cases.
- The government revised monthly figures for all of 2021, showing a more even distribution of monthly growth.
Friday's monthly employment report from the Bureau of Labor Statistics included major upward revisions to data from previous months, so the gain—while much bigger than expected—was the smallest since September, using the new figures. Still, almost every industry was hiring, with even the pandemic-vulnerable restaurant sector adding 108,000 jobs on a seasonally-adjusted basis. A slight uptick in the unemployment rate, which rose from 3.9% to 4%, wasn’t unwelcome news either, since it reflected more people actively looking for work, economists said.
The increase of nearly half a million jobs suggests the economy continued to recover despite a surge in COVID-19 cases in January that disrupted business and caused many workers to call in sick. It also countered data showing jobs in the private sector fell in January. The country has now recovered 19.1 million of the 22 million jobs lost in the pandemic.
“The US labor market roared ahead in January despite the surge in Omicron cases,” CIBC Economics wrote in an email commentary.
Concerns about a wave of absences were not unfounded: 3.6 million people were out sick when the bureau collected its data in mid-January, double as many as in December and the most since the statistic was first tracked in 1976.
But it’s unclear how much that may have affected the increase in jobs. (The 467,000 would exclude anyone who wasn’t paid during the bureau’s survey period, but the 3.6 million figure comes from its survey of households, while the 467,000 comes from its survey of employers.)
Another 6 million were unable to work because their employer was closed or lost business due to the pandemic, according to the household survey. That’s twice the December figure but a far cry from the 50 million who said the same in May 2020, shortly after the pandemic hit.
The large revisions to previous months’ data reflected changes to the bureau’s’ seasonal adjustment models as well as an annual benchmarking process. (Like many organizations that track economic data, the bureau makes seasonal adjustments so that the numbers show underlying trends rather than normal seasonal patterns.) The changes increased job growth the previous two months by 709,000 and pared blockbuster job gains from last summer by 807,000 jobs. The changes mostly canceled each other out, but played havoc with attempts by economists to interpret month-to-month changes.
“It's a bit of a surprise,” said Phil Noftsinger, labor analyst and president of payroll at CBIZ, a business services company. “I'm going to want to see more data in the coming months to support that we're not looking at an anomalous reading.”
The report also showed wages continued to rise far more rapidly than before the pandemic began, another sign of how desperate employers are to attract and retain workers. Average hourly pay rose to $31.63 in January, 5.7% higher than 12 months earlier. That’s the biggest annual jump seen since the early crush of the COVID-19 crisis and nearly double what was typical in pre-pandemic times.
Another positive sign for the job market: the labor force participation rate edged up to 62.2% from 61.9%, making progress back towards the 63.4% pre-pandemic rate. This is a measure of how many people have or are actively looking for a job and a key factor for growth and the overall health of the economy. Some economists took that number with a grain of salt though, since it reflected a one-time adjustment to reflect the 2020 Census.
The increase in participation was also the reason for the increase in the unemployment rate, an uptick that economists said didn’t reflect a real hiring setback.
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