The numbers: The United States recovered a meager 49,000 jobs in January and the unemployment rate fell again, but the economy continues to struggle to recover after a historic rise in the coronavirus led to more layoffs in late last year.
The weak employment report added fuel to Democratic demands for another large dose of federal aid to help the economy. The Biden administration is seeking nearly $ 2 trillion in Congress, including $ 1,400 for most families.
The United States had again lost jobs in December for the first time since the outbreak of the pandemic after coronavirus cases skyrocketed again. Many states imposed business restrictions to combat the pandemic and restaurants and hotels had to lay off workers, some for the second or third time.
Read: Applications for unemployment benefits fall within a minimum of 9 weeks
The U.S. economy, which struggled for a record period of coronavirus cases, gained just 49,000 new jobs in January.
Spencer Platt / Getty Images
But with Covid-19 cases declining again in January, restrictions are being lifted and more people are returning to work or finding new jobs. Still, the peak of the winter coronavirus case affected the economy’s momentum and left millions on the unemployment list. About ten million jobs that disappeared in the early stages of the pandemic have yet to return.
The U.S. unemployment rate, meanwhile, fell to 6.3% in January, from 6.7% to a new pandemic low, but the decline was largely due to that people abandoned the job search and therefore left the labor force.
“We don’t have to take solace especially because the unemployment rate fell drastically, because it’s mainly because more Americans left the workforce,” said Robert Frick, a corporate economist at the Navy Federal Credit Union.
Economists say the true level of unemployment is several points higher. One important reason is that several million people who left the workforce because they could not find work are not counted in the main unemployment rate.
The rise in employment last month coincided with the Wall Street forecast. Economists surveyed by the Dow Jones and the Wall Street Journal had expected a gain of 55,000. Earlier on Friday, shares rose.
What happened: The small increase in jobs in January was exaggerated with the increase in employment in K-12 public schools and colleges. Government jobs increased by 43,000, but it was largely a statistical mirage linked to seasonal adjustments that have been distorted by the pandemic.
The private sector created only 6,000 new jobs in general.
Professional technology, science and other companies added 93,000 employees last month to lead hiring. Wholesalers and energy producers also covered more jobs.
But employment fell to almost every other part of the economy.
Jobs in leisure and hospitality (restaurants, hotels, casinos, theaters and the like) fell by 61,000 in January after a massive drop of 536,000 in December.
States began lifting business restrictions last month as coronavirus cases began to recede again, but not enough to give a big boost to employment.
Retailers lost 38,000 jobs, healthcare providers cut 30,000 jobs and warehousing and transportation companies cut payrolls by 28,000.
Employment also fell slightly in construction and manufacturing.
Meanwhile, the number of jobs lost in December rose to 227,000, from the initial 140,000. The increase in new jobs in November fell to 264,000 from the previous 336,000.
The general picture: The economy is sure to grow faster this year and add millions of jobs lost if coronavirus vaccines are effective and Washington approves more promised aid. This would give a boost to an already sparkling stock market.
Still, progress is likely to be slow over the next few months, with most of the population still waiting to receive the vaccine. The longer the recovery lasts, economists warn, the greater the risk that many jobs will never return.
What do they say? “There is still a long way to go to reach full employment and the case for the fiscal stimulus has become a little stronger,” said Curt Long, chief economist at the National Association of Federally Secured Credit Unions.
“The U.S. job market suffered the ball at the end of the year, but the vaccine launch promises to push the team toward the end zone over the summer,” said senior economist Sal Guatieri of BMO Capital Markets.
Market reaction: The Dow Jones Industrial Average DJIA,
and S&P 500 SPX,
rose in trades on Friday. Stocks have been growing in anticipation of more stimuli and a faster deployment of vaccines.