WASHINGTON (Reuters) – US employment growth picked up moderately in January and previous month’s job losses were deeper than initially thought, boosting demand for a major US aid package. government to help recover from the COVID-19 pandemic.
On Friday, the Labor Department report, closely monitored, showed job losses in manufacturing and construction, two sectors that have boosted the economy. There were more job losses in restaurants and bars. Retailers and employers in the transportation industry also laid off workers.
Millions of Americans experience long periods of unemployment and permanent job losses, while others have stopped looking for work. President Joe Biden on Friday cited the weak report to push the U.S. Congress to approve a $ 1.9 trillion recovery plan amid Republican resistance, now worried about growing national debt.
“It is very clear that our economy still has problems,” Biden said in a speech to the nation. “I am in great pain in this country. I will act quickly. “
Biden’s fellow Democrats in Congress approved a budget scheme that will allow them to get the stimulus over the next few weeks without Republican support.
Non-farm payrolls increased by 49,000 jobs last month. December data was revised to show 227,000 jobs lost instead of 140,000 as previously reported. Employment is 9.9 million jobs below its peak in February 2020.
The economy also created 250,000 fewer jobs in the twelve months to March 2020 than previously estimated. The Congressional Budget Office has estimated that employment would not return to its pre-pandemic level until 2024. Economists surveyed by Reuters had predicted that payrolls would increase by 50,000 jobs in January.
“The weakness presented in today’s labor report opens the door for the Biden administration to move forward with a higher spending package and provide relief to many Americans and businesses who continue to struggle with the pandemic,” he said Charlie Ripley, senior investment strategist at Allianz Investment Management.
The December payroll drop was the first in eight months and came amid renewed restrictions on companies such as restaurants and bars to curb the resurgence of coronavirus infections. Although these limits on companies continued in the first fortnight of January, there is reason for cautious optimism, as some employment measures have stabilized since the second half of January, when the authorities began to reduce restrictions.
The government conducted a survey of companies to get the employment report from January to mid-month. He noted that the response rate to the survey was “slightly below average”.
Nearly $ 900 billion in additional money provided by the government in late December and the acceleration in the distribution of virus vaccines could lift recruitment in the coming months. In addition, it appears that the rate of COVID-19 infections peaked in early January.
“We hope January marks the lowest point for job creation in 2021,” said James Knightley, ING’s chief international economist in New York. “It is likely that from the second quarter much stronger work figures will occur.”
Stocks on Wall Street rose. The dollar fell against a basket of currencies. US Treasury prices were lower.
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LONG WAY FOR RECOVERY
Last month, manufacturing payrolls fell by 10,000 jobs, while employment in the works fell by 3,000.
Retailers left 38,000 jobs and health employment fell by 30,000. The transportation and storage industry lost 28,000 jobs. There were 61,000 job losses in the leisure and hospitality sector. But employment in professional and business services increased by 97,000, with temporary hiring accounting for almost all of the profits.
Government payrolls increased by 43,000 jobs, elevated by state and local government education.
Although the unemployment rate fell to 6.3% in January, from 6.7% in December, this was because many people stopped looking for work. The unemployment rate was also reduced by people who were erroneously classified as “employed but absent from work”. Without this misclassification, it would have been 6.9%.
Just over 4 million Americans have been unemployed for more than six weeks, accounting for 39.5% of the unemployed in January. The ranks of those who have lost their jobs permanently increased to 3.5 million, from 3.4 million in December. These people could struggle to find work or get higher pay when they remain unemployed.
The labor force participation rate, or the proportion of working-age Americans who have or are looking for work, fell to 61.4% from 61.5% in December. The participation rate has declined significantly during the pandemic, with women accounting for most of the dropouts.
This has been attributed to the difficulties in securing the care of children, as many schools remain closed for face-to-face learning.
“There’s still a lot of work to be done to get back to maximum employment,” said Chris Low, chief economist at FHN Financial in New York.
The report also highlighted the so-called K-shaped recovery, where the highest paid workers are doing well, while the lowest paid workers are losing. The continued delimitation of lower-paying jobs boosted annual wage growth to 5.4%, from 5.1% in December. The average work week went from 34.7 hours to 35 hours.
“Businesses and the administration will need to work together to implement policies and programs that close this divergent gap and ensure that displaced Americans can return to the workforce,” said Karen Fichuk, CEO of Randstad in North America. North.
Report by Lucia Mutikani; Edited by Chizu Nomiyama and Andrea Ricci