The American worker got a 5.7% raise in January, but it may not be enough to solve the labor shortage


Hiring unexpectedly accelerated in January as the Omicron variant reached its peak in the US.

The US economy added 467,000 nonfarm payrolls last month, the Bureau of Labor Statistics announced Friday morning. That vastly exceeded the median estimate of 150,000 new jobs from economists surveyed by Bloomberg.

November's job gains were revised a second time to 647,000 jobs from 249,000, according to the report. December's preliminary print was updated to 510,000 from 199,000. The dual revisions signal hiring fared far better in the final months of 2021 than the initial data suggested.

The unemployment rate rose to 4% from 3.9%. That landed above the median forecast of 3.9%, but the increase was largely driven by more Americans coming off the sidelines and looking for work.

The Friday report is the first to catalog the Omicron wave's full effects on the labor market's recovery. The report's survey period ended just after daily case counts peaked on January 10 at more than 1.4 million. By comparison, December's preliminary reading only tracked job creation through the start of the wave, when daily infections averaged roughly 120,000.

Revisions Included in the Friday report reveal the elevated case counts did little to dent hiring. The data show a booming recovery through the first month of the new year and hint the economy is far more resilient to the virus than before.

"These data make it clear that the labor market ahead of Omicron was much stronger than previously believed, and it's very tempting to argue that the Jan data mean that all danger of an Omicron hit has passed," Ian Shepherdson, chief economist at Pantheon Macroeconomics, said in a Friday note.

The labor force participation rate rose to 62.2% from 61.9%, marking a healthy improvement after months of little change. The measure has taken on new importance during the recovery as millions of Americans sit on the labor market's sidelines. Participation had been slow to recover, leaving employers struggling to hire as the worker supply remains strained. Yet the uptick in January suggests more people sought work even amid the Omicron wave. The improvement is also behind the gain in the unemployment rate, as an increase in job searchers will lift the overall number of unemployed Americans.

The number of jobless adults was little changed at 6.5 million through January. The US still has roughly 2.9 million jobs to create before returning to its pre-crisis count. Even when those payrolls are recovered, total jobs will still only be at their February 2020 levels. It will likely take several more months to recoup the job growth lost during the pandemic.

The average hourly wage rose by $0.23, or 0.7%, to $31.63 in January, according to the report. That exceeded the median forecast for a 0.5% jump. The print shows wage growth continuing to outpace its historical average as the labor shortage entered the new year. The phenomenon has forced businesses to issue larger raises to more efficiently attract workers. The pay bumps have raised some concerns around higher inflation, but healthy productivity growth through the fourth quarter suggests the country is far from facing a wage-price spiral.

Where hiring surged most through Omicron

The usual suspects led the hiring boom through January. Leisure and hospitality businesses once again saw the biggest jump in hiring, with firms adding 151,000 payrolls. The sector has led the hiring recovery throughout the pandemic, largely due to such businesses losing the most jobs through early lockdowns. Previous virus waves slowed leisure and hospitality hiring as infection fears kept people from seeking work. The Friday report hints vaccination and the Omicron variant's reduced severity helped such in-person businesses continue hiring despite the virus surge.

Professional and business services followed with a gain of 86,000 jobs. Retailers added 61,400 jobs through January, and transportation and warehousing firms created 54,200 payrolls.

Construction businesses were the only ones to shed jobs last month, with the sector posting a decline of 5,000 jobs, according to the report.

More than 3.6 million Americans were absent from work because of illness in January, more than at any prior point in the pandemic. That’s more than 2 percent of the entire workforce.

Post a Comment

Previous Post Next Post