The numbers: The US regained a meager 49,000 jobs in January and the unemployment rate fell again, but the economy is still struggling to recover after a record spike in the coronavirus led to more layoffs late last year.
The weak employment report fueled the Democratic demands for another large dose of federal aid to help the economy. The Biden administration is demanding nearly $ 2 trillion from Congress, including $ 1,400 payments for most families.
The US had lost jobs in December for the first time since the outbreak of the pandemic, after cases of coronavirus increased again. Many states re-imposed corporate restrictions to combat the pandemic, and restaurants and hotels had to lay off employees, some for the second or third time.
Read: Claims for unemployment benefits fall to the lowest level of 9 weeks
The U.S. economy, which is struggling with a record number of coronavirus cases, only got 49,000 new jobs in January.
Spencer Platt / Getty Images
But as the cases of Covid-19 recede in January, restrictions are lifted and more people are returning to work or looking for new jobs. But the spike in the winter coronavirus case stifled the economy’s momentum and left millions on the unemployment roll. About 10 million jobs that disappeared in the early stages of the pandemic have still not returned.
The US unemployment rate, meanwhile, fell from 6.7% to 6.3% in January, hitting a new pandemic low, but the drop was largely due to people quitting their job search and dropping out of the labor force.
“Above all, we should not take comfort in the fact that the unemployment rate has fallen dramatically, as it is mainly because more Americans have left the workforce,” said Robert Frick, a business economist at the Navy Federal Credit Union.
Economists say the true level of unemployment is several points higher. An important reason is that several million people who have dropped out of the labor force because they could not find work are not counted in the main unemployment rate.
Employment growth last month was in line with Wall Street’s forecast. Economists surveyed by Dow Jones and The Wall Street Journal had expected a profit of 55,000. Stocks rose in early Friday trades.
What happened: The small increase in the number of jobs in January was exaggerated by a reported increase in employment in primary and public colleges. The number of government jobs increased by 43,000, but it was largely a statistical mirage linked to seasonal adjustments disrupted by the pandemic.
The private sector created only 6,000 new jobs in total.
Professional companies in technology, science and so on added 93,000 employees last month to lead the way in hiring. Wholesalers and energy producers also filled more jobs.
But employment fell in almost every other part of the economy.
Leisure and hospitality jobs – restaurants, hotels, casinos, theaters and the like – were down 61,000 in January, after a massive drop from 536,000 in December.
States began to lift corporate restrictions last month as coronavirus cases began to recede, but not enough to give employment a significant boost.
Retailers cut 38,000 jobs, healthcare providers cut 30,000 jobs, and warehousing and transportation companies cut payrolls by 28,000.
Employment also fell slightly in construction and industry.
The number of jobs lost in December has now increased from 140,000 to 227,000. The increase in the number of new jobs in November was reduced from 336,000 to 264,000.
The big picture: The economy will certainly grow faster this year, adding millions of lost jobs if the coronavirus vaccines prove effective and Washington approves more financial aid. That would boost an already frothy stock market.
Still, progress is likely to be slow in the coming months with most of the population still waiting for their vaccination shots. The longer the recovery takes, economists warn, the greater the risk that many jobs will never return.
What do they say? “There is still a long way to go to full employment, and the case for fiscal stimulus has gotten a little stronger,” said Curt Long, chief economist at the National Association of Federally-Insured Credit Unions.
“The US job market has been reeling around the turn of the year, but the introduction of the vaccine promises to push the team into the end zone by the summer,” said BMO Capital Markets senior economist Sal Guatieri.
Market reaction: The Dow Jones Industrial Average DJIA,
and S&P 500 SPX,
rose in Friday trades. Stocks have risen in anticipation of more incentives and a faster roll-out of vaccines.