The U.S. economy created far more jobs than likely in January but regardless the disruption to consumer-facing businesses from a surge in COVID-19 cases, pointing to underlying strength that should sustain the expansion as the Federal Reserve starts to raise interest rates.
On Friday, The Labor Department’s closely watched employment report and also showed a whopping 709,000 more jobs were added in November and December than previously estimated. Wage gains accelerated last month and the labor pool expanded.
The upbeat report ended days of anxiety among economists and White House officials who had frantically tried to prepare the nation for a disappointing payrolls number.
“This is a strong jobs report,” said Chris Low, chief economist at FHN Financial in New York. “The odds of quelling inflation without a recession look better today than yesterday.”
Nonfarm payrolls increased by 467,000 jobs last month, the survey of establishments showed. Economists polled had forecast 150,000 jobs would be added in January. Estimates ranged from a decrease of 400,000 to a gain of 385,000 jobs.
Employment is 2.9 million jobs below its pre-pandemic peak.
LABOR POOL EXPANDS
Economists had anticipated a weak jobs report as the government surveyed businesses for payrolls in mid-January, when Omicron infections were peaking. The Labor Department said a record 3.616 million people who had a job were absent during the survey week because of illness.
Workers who are out sick or in quarantine and do not get paid during the payrolls survey period are counted as unemployed in the establishment survey even if they still have a job. Lower-paid hourly workers in industries like healthcare as well as leisure and hospitality, who typically do not have paid sick leave, bore the brunt of the winter COVID-19 wave.
According to the latest government data, paid sick leave was available to 79% of civilian workers in March 2021.
The leisure and hospitality industry added 151,000 jobs in January. Healthcare employment increased by 18,000. There were gains in retail, professional and business services employment as well as transportation and warehousing, and wholesale trade.
Unemployment rate
Rate of unemployment since the start of the Coronavirus pandemic in Feb. 2020
Other details of the household survey were strong. Employment increased by 1.199 million jobs. The survey counts people who have a job as employed regardless of whether they got paid during the survey week if they were temporarily absent from their jobs because of illness or other reasons.
A broader measure of unemployment, which includes people who want to work but have given up searching and those working part-time because they cannot find full-time employment, dropped to 7.1%, the lowest since February 2020, from 7.3% in December.
With some lower hourly paid workers at home, wage growth accelerated. Average hourly earnings surged 0.7%, which raised the annual increase to 5.7%, the largest gain since May 2020.
But Omicron’s surge cut the average workweek to 34.5 hours, the shortest since April 2020, from 34.7 hours in December.
“All in all, the U.S. economy appears to be on a strong footing,” said Noah Williams, an adjunct fellow at the Manhattan Institute”.
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