Employment growth returned to the United States in January, with non-farm payrolls rising by 49,000 while the unemployment rate fell to 6.3%, the Department of Labor said on Friday in the first Biden administration employment report.
Economists surveyed by Dow Jones had sought growth of 50,000 and unemployment would remain unchanged at 6.7%. However, many Wall Street analysts had been looking for higher figures; Citigroup had projected a profit of 250,000.
The soft report did not negatively affect markets, as stocks opened positively and longer-term government bond yields rose.
The sharp fall in unemployment occurred when the labor force participation rate fell to 61.4% and 406,000 workers left the labor force. However, a more global measure of unemployment, including discouraged and part-time workers for economic reasons, also fell, falling to 11.1% from 11.7% in December.
“While we won jobs in January after the December loss, this is not a report on what we have changed,” said Robert Frick, a corporate economist at the Navy Federal Credit Union. “We shouldn’t take solace especially because the unemployment rate fell dramatically, because it’s mainly because more Americans left the workforce.”
While the job outlook is a challenge, 2021 marked a return to earnings after a month-long hiatus in December, the first negative number since the recovery began in May.
Just over 10 million remain unemployed, 4.3 million more than a year ago, although the figure fell by 606,000 in January. Companies cut jobs in March and April to combat the Covid-19 pandemic and most sectors remain below pre-pandemic levels.
The damage has been particularly severe to the hospitality industry, as governments across the country have forced hotels, bars and restaurants to close or operate with reduced capacity to stop the spread of coronavirus.
The hospitality sector lost 61,000 more jobs in the months after suffering a revised downward exodus of 536,000 in December.
Overall, the December figures were worse than initially reported, with one month recording a loss of 227,000 from the initial estimate of 140,000. November earnings were also sharply revised, from 336,000 to 264,000.
January earnings were concentrated in employment and professional services (97,000) and local government education (49,000). Wholesale added 14,000 while mining increased by 9,000.
Retail trade also fell 38,000 after adding 135,000 during the December holiday shopping season, while healthcare also lost 30,000 positions. Since February, the last month before the pandemic, the sector fell 383,000.
Those reported to have been temporarily laid off fell to 2.7 million, although permanent job losers changed little, at 3.5 million. Long-term unemployment also changed little, at 4 million, while those who did not work for less than five weeks fell to 2.3 million.
Vaccines have provided hope that the U.S. economy can run at full speed during the second half of the year, although the immediately preceding months are likely to be difficult. Gross domestic product fell 3.5% in 2020 and the outlook for the first quarter, especially in 2021, is uncertain. Most economic figures have exceeded expectations, but concerns remain that the persistence of the virus could hamper economic activity earlier this year.
President Joe Biden’s administration has been pushing for a $ 1.9 trillion bailout package that includes direct payment to Americans and improved unemployment benefits. While Republicans have offered a more competitive proposal, Democrats are willing to pass the most costly plan even without Republican Party support.
Correction: An earlier version mistakenly read the December job report.