The U.S. economy added 49,000 jobs in January, Bureau of Labor statistics revealed Friday, ending a six-month decline in job creation but doing little to overcome a year of employment losses.
The tepid increase followed a decline of 227,000 jobs in December, the first loss since April. The unemployment rate for January fell sharply from 6.7% to 6.3%, the Labor Department said Friday.
About half the drop occurred because some of those out of work found jobs, while others stopped looking for work and were no longer counted as unemployed.
The jobless rate has also been understated by people misclassifying themselves as being ’employed but absent from work.’
The figures reflect a faltering job market, slowed by a viral pandemic that is still causing consumers to avoid traveling, shopping, dining out, attending entertainment venues and engaging in other forms of face-to-face contact. Nearly 10 million Americans remain unemployed.
Some states and localities re-imposed restrictions on businesses in December as cases spiked.
Some of those restrictions were loosened in January, though perhaps not in time to affect the jobs report, which measures employment in the middle of each month.
Mixed signs: The January economy saw 49,000 jobs created and unemployment fall but nowhere near enough to reverse a year of dramatic employment losses
Still closing: As hiring has slowed, many employers have continued to lay off workers. The number of applications for unemployment benefits, though declining for the past few weeks, remained at an elevated 779,000 last week.
$1.9 trillion effort: Joe Bidden sees the tepid jobs growth as proof of the need for his huge spending package which early Friday morning passed the Senate with a tie-breaking vote by Kamala Harris
As hiring has slowed, many employers have continued to lay off workers. The number of applications for unemployment benefits, though declining for the past few weeks, remained at an elevated 779,000 last week.
The tepid employment figures reflect a weak job market, slowed by a still-widespread viral pandemic that is causing consumers to avoid traveling, shopping, dining out, attending entertainment venues and engaging in other forms of face-to-face contact.
At the same time, many states and localities re-imposed restrictions on businesses as cases spiked in December. Some of those restrictions were loosened last month, though not necessarily in time to affect the jobs report, which measures employment in the middle of each month.
The hardships that millions of Americans are suffering trends have fueled President Joe Biden’s push for a $1.9 trillion rescue aid package, which would provide $1,400 checks for most U.S. individuals and a $400 weekly unemployment payment on top of state benefits.
The package would also extend two federal jobless aid programs, from mid-March through September.
The weak January jobs data could give further political impetus to Biden’s package. Early Friday, the Senate approved a measure that would let Democrats muscle Biden´s $1.9 trillion plan through the chamber without Republican support.
The measure now returns to the House, where it will have to be approved before work on the aid package will begin in several congressional committees.
The damage to the job market since March has widened financial inequality in the United States, especially hurting women and people of color.
At the same time, Americans fortunate enough to have kept their jobs have amassed $2.3 trillion in savings – double the pre-pandemic total.
That enlarged pool of savings could fuel a rapid rebound in spending as business restrictions are lifted and more Americans become more confident about shopping, dining out and traveling.
Economists increasingly suggest that as vaccinations reach a critical mass in the coming months and the government provides further stimulus, the economy and the job market will strengthen much faster than they did after previous recessions.
Bank of America estimates that growth could reach 6% this year, which would be the fastest since 1984.
Some hopeful signs have emerged recently to suggest that the economy might be picking up a bit.
Auto sales rose solidly in January. And a gauge of business growth in the service sector picked up to its highest level in two years. It also showed that services firms added workers last month.
A separate measure of manufacturing indicated that factories are also expanding. So is spending on home construction.
The reason why a gain in the January jobs report might be viewed skeptically is that it would likely be exaggerated by the government’s seasonal adjustment process.
The government uses seasonal adjustments to try to filter out the impact of short-term changes that don’t reflect underlying economic trends.
One example involves the annual layoffs of temporary retail employees who were hired for the holiday shopping season.
Retail stores, along with restaurants, bars and hotels, typically hire extra staff for the holiday season and then let them go in January.
The government’s seasonal adjustments factor in this annual pattern to avoid showing a huge job gain before the holiday season and then a huge loss afterward.
This year, though, holiday hiring was likely much weaker because of the pandemic. As a result, layoffs in January probably weren’t as large as they typically are. As a result, the seasonal adjustment process might have exaggerated any hiring gain last month.
January is also the month when the Labor Department incorporates new Census estimates of the U.S. population. That could cause fluctuations in the unemployment rate.
‘It’s going to be a wild month,’ said Gregory Daco, chief U.S. economist at Oxford Economics.
— to www.dailymail.co.uk