US Jobs Report, January 2021: Payrolls Rise Less Than Expected After Larger Decrease

Photographer: George Frey / Bloomberg

The recovery in the US labor market disappointed for its second month in January with only modest job growth, underscoring the continuing difficult outlook for millions of unemployed and reinforcing calls for more stimulus measures.

Nonfarm payrolls were up just 49,000 after a downwardly revised decline from 227,000 in December, according to a report by the Labor Department on Friday. The unemployment rate fell to 6.3%, due to an increase in the number of employees and more people leaving the workforce.

The January data may bolster the case for another massive pandemic relief package. President Joe Biden has proposed a $ 1.9 trillion package, but many Republicans prefer to delay more aid and wait for the $ 900 billion aid package to flow through the economy in December.

“Without further assistance, our economy will continue to struggle,” said Heather Boushey, a member of the White House Council of Economics Advisers, in an interview on Bloomberg Television following the report. “We have to keep acting and we have to do it quickly.”

Read more: Tracking Coronavirus Stimulus in the USA.

Private payrolls rose by just 6,000 last month, limited by job losses in retail, transportation and storage, and recreation and hospitality, while other industries posted only modest gains. The latest job figures put a dent in a recent series stronger economic data, including growth in industry and housing.

At the same time, the report contained some bright spots. Americans are working longer hours and employment in temporary emergency services has increased the most in three months, which could be a harbinger of hiring in the coming months.

The average number of hours per week rose to 35, the highest number of hours until 2006. Payroll administration at temporary emergency services rose by nearly 81,000.

The report “shows a job market entering water,” said Bank of America Corp. economists Joseph Song and Alexander Lin. in a note. “But there are some early signs of better things to come.”

The median estimates in a Bloomberg poll of economists called for a 105,000 wage increase and an unemployment rate of 6.7%. Stocks rose after the report, yields on the 10-year Treasury climbed and the dollar fell.

Pandemic ravaged year

According to revised government data, the economy lost 9.3 million jobs in 2020.

Restrictions on activities and businesses have diminished, but fears of more contagious virus variants may slow consumer activity. Pandemic-sensitive sectors such as leisure and hospitality are likely to remain depressed until widespread vaccinations enable robust spending on services.

Weak industry failure

• Payrolls for recreation / hospitality are down 61,000 after a decline of 536,000 in Dec.
• Healthcare / social assistance decreased by 40.8 thousand
• Retail trade fell by 37.8 thousand
• Transport / warehousing decreased by 27.8 thousand after a decrease of 24.1 thousand
• Production fell by 10,000 in January

“The January data raises concern that the weakness that was believed to be concentrated in sectors such as leisure and hospitality may be more widespread,” Bloomberg economists Carl Riccadonna, Yelena Shulyatyeva and Eliza Winger said. Note.

When it comes to remuneration, the average hourly wages increased 0.2% from the previous month and 5.4% from a year earlier. These numbers were difficult to interpret during the pandemic, given the scale and distribution of job losses and gains.

And with the challenges ahead, nearly 40% of the unemployed have been out of work for 27 weeks or more. That group, known as the long-term unemployed, has changed little since December by just over 4 million.

Dig deeper

• The unemployment rate would have been 0.6 percentage point higher if misclassified workers had been classified as unemployed
• Unemployment rates for white, Hispanic, and black Americans fell in January; The unemployment rate for Asian Americans soared. read more here
• The employment rate of women aged 25 to 54 was unchanged at 74.8%, still well below the pre-pandemic level
• The U-6 rate, also known as the under-unemployment rate, fell from 11.7% to 11.1%. (In contrast to the overall unemployment rate – or U-3 rate – the U-6 includes those who work part-time for economic reasons and those who have stopped looking for a job because they are discouraged about their job prospects)
• The employment dispersion index, a measure of the breadth of hiring in the private sector, fell from 61.9 to 48.1. The figure for January is the lowest since April
• The average number of hours per week for non-supervisory employees rose to 34.4 in January, the longest working week since 2000

– With the help of Kristy Scheuble, Sophie Caronello and Jonathan Ferro

(Adds comment from economist)