Nonfarm payroll employment saw a very moderate increase in January, adding just 49,000 jobs to come in below expectations but reversing December’s 227,000-job drop.
The U.S. Bureau of Labor Statistics reported the new figures, which continued to show weakness in the labor market due to the negative impacts of COVID-19 and widespread efforts to contain its proliferation. Consensus had called for an increase of 105,000 jobs, according to Wells Fargo, with the bank’s own forecast anticipating a more modest but still undershot addition of 60,000 jobs.
Overall, employment remains 6.5% below its pre-pandemic February 2020 level a difference of about 9.9 million jobs.
Notable employment increases were seen in professional and business services, which saw jobs climb by 97,000 in January. Temporary help services accounted for the vast majority of the increase, adding 81,000 jobs, providing somewhat of a silver lining, according to Mortgage Bankers Association senior vice president and chief economist Mike Fratantoni.
“The increase in average weekly hours, coupled with the boost in hiring of temps, suggests that employers are poised to hire more over the next several months if the economy rebounds as we expect,” Fratantoni said.
Gains were also seen in the education sectors, with local government education adding 49,000 jobs, state government education increasing by 36,000, and private education adding another 34,000. Again, the impacts of the pandemic are felt here, with disruptions to onsite schooling distorting normal seasonal hiring patterns and likely giving January’s educational job gains a bump.
Such gains, however, were offset by continued softness in leisure and hospitality hiring. The sector subtracted another 61,000 jobs in December following December’s massive 536,000-job decline. Much of that continued drop was in California and New York, two states which had re-imposed strict restrictions on bars and restaurants due to the virus’ resurgence.
Nationally, the leisure and hospitality segment has been on a downward-trending roller coaster since the pandemic reached the U.S., with employment plummeting by 8.2 million in March and April, rising by 4.9 million from May to December, then falling again by 597,000 over the last two months.
Compared to February, leisure and hospitality employment is now down 3.9 million, a drop of 22.9%.
Job losses were also heightened by expected post-holiday payroll declines in several sectors, including retail, delivery services and warehousing. Those three industries combined shed 68,900 jobs in January. Excluding such inflated seasonal swings (as well as the exaggerated educational rebound) would have left nonfarm payroll employment at a slight decrease.
The unemployment rate did see another welcome decline, falling 0.4 percentage points to recede to 6.3% after being marooned at 6.7% in November and December. Still, the drop in the jobless rate masked more underlying issues in the recovery almost a year after the onset of the pandemic, as Fratantoni observed.
“Although the headline unemployment rate declined, there are still 4 million people who have been actively looking for work for 27 weeks or longer,” he said. “These are the workers that need additional support from the proposed stimulus bill, including enhanced unemployment benefits and direct payments.”
