US Employment Report in January 2021: Payrolls rise less than expected after a bigger decline in December

Photographer: George Frey / Bloomberg

The recovery in the US labor market disappointed for a second month of January with modest employment growth, highlighting the persistent difficulties for millions of unemployed and strengthening the demands for more stimulus.

Non-farm payrolls rose just 49,000 after a revised downward decline from December 227,000, according to a Labor Department report on Friday. The unemployment rate fell to 6.3%, reflecting a recovery in the number of people employed and more people leaving the workforce.

January data may bolster the case for another major pandemic relief package. President Joe Biden has proposed a $ 1.9 trillion package, but many Republicans prefer to put up with more aid and wait for the $ 900 billion December aid package to leak into the economy.

“Without further help, our economy will continue to struggle,” Heather Boushey, a board member of the White House Economy Council, said in an interview with Bloomberg Television after the report. “We have to keep acting and we have to do it quickly.”

Read more: Follow-up Crown virus Stimulus in the US

Private payrolls rose just 6,000 last month, hampered by job cuts in retail, transportation and storage, and leisure and hospitality, while other industries saw only modest gains. Recent job figures have damaged a recent chain of stronger economic data, including growth in housing manufacturing and construction.

At the same time, the report included some bright spots. Americans work longer hours and employment in temporary support services has increased further in three months, which may portend a recovery in hiring in the coming months.

The average number of hours per week rose to 35, the highest in 2006 data. Temporary aid payrolls rose to almost 81,000.

The report “shows a labor market that treads on water,” Bank of America Corp. economists Joseph Song and Alexander Lin said in a note. “But there are some incipient signs of better things to come.”

Average estimates in a survey of Bloomberg economists called for a payroll increase of 105,000 and an unemployment rate of 6.7%. Shares rose after the report, the yield on the 10-year Treasury bill rose and the dollar fell.

Pandemic-Premiere Year

The economy lost 9.3 million jobs in 2020, according to government-reviewed data.

Restrictions on activity and businesses have eased, but fears of more contagious virus variants may slow consumer activity. Pandemic-sensitive sectors, such as leisure and hospitality, are likely to remain depressed until widespread vaccines allow for solid spending on services.

Weak industry breakdown

• Leisure / hospitality payrolls fell 61,000 after falling 536,000 in December.
• Health care and social care fell 40.8 k
• Retail trade decreased 37.8 k
• Transportation / storage fell 27.8k after falling 24.1k
• Manufacturing fell 10,000 in January

“January data raises concerns that the weakness that was supposed to be concentrated in sectors such as leisure and hospitality may be more widespread,” said Carl Riccadonna, Yelena Shulyatyeva and Eliza Winger, a Bloomberg economist. note.

At the time of payment, average hourly earnings increased by 0.2% over the previous month and increased by 5.4% over the previous year. These figures have been difficult to interpret during the pandemic given the scale and distribution of job losses and gains.

And, as a sign of challenges ahead, nearly 40% of the unemployed have been out of work for 27 weeks or more. This group, known as the long-term unemployed, has changed little since December, with just over 4 million.

Digging deeper

• The unemployment rate would have been 0.6 percentage points higher if poorly classified workers were included among the unemployed
• Unemployment rates declined in January for white, Hispanic, and black Americans; The unemployment rate for Asian Americans rose. Read more here
• The participation rate of women aged 25 to 54 remained unchanged at 74.8%, still below pre-pandemic levels
• The U-6 rate, also known as the underemployment rate, fell to 11.1% from 11.7%. (Unlike the main unemployment rate or the U-3 rate, the U-6 includes those who work part-time for economic reasons and those who have stopped looking for work because they are discouraged from their job prospects)
• The employment spread index, a measure of the breadth of hiring among private industries, fell to 48.1 from 61.9. The January figure is the lowest since April
• The average weekly hours of non-supervisory workers rose to 34.4 in January, the longest working week since 2000

– With the assistance of Kristy Scheuble, Sophie Caronello and Jonathan Ferro

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