The U.S. economy appeared to shrug off the effects of the spreading Omicron variant of COVID-19 in January, with gains exceeding economists’ expectations.
Roughly 467,000 jobs were added to employer’s payrolls in January 2022, according to the Bureau of Labor Statistics (BLS).
In fact, benchmark revisions to November and December’s gains added more than 700,000 jobs to initial estimates. However, these same revisions took back about the same amount in June and July. The annual benchmark revisions resulted in a net change of 217,000 additional jobs in 2021 than initially reported.
Still, the BLS’ January employment report overshot economists’ expectations, especially in light of the net job loss of 301,000 reported in Moody’s ADP National Employment Report for the same period. The headline or U3 unemployment rate ticked up to 4% as the civilian labor force participation rate increased (partly through revisions) with more of the unemployed returning to the labor pool to look for work.
The adjustments made to population estimates for the BLS’ Household Survey make comparisons to December’s figures tricky, but generally, there was little change in over-the-month measures. Although the unemployment rate was unaffected by the population adjustments, both the Civilian Labor Force participation rate (62.2%) and employment-population ratio (59.7%) increased 30 basis points (bps) from December’s unrevised figures but would have been unchanged otherwise.
The unemployment rate for adult men increased 20 bps to 3.8% from December, while the rate for adult women was unchanged at 3.6%. The rate for teenagers also remained the same as in December at 10.9% despite the majority of job gain for January in the Leisure and Hospitality sector.
The annual change in average hourly earnings of $1.70 (to $31.63) was 5.7% greater than last January’s rate and the fourth consecutive month above $1.40. However, the CPI index including food and energy rose 7% in December, cutting into those gains and stoking fears of rampant inflation. Industry wage growth varied greatly with Leisure and Hospitality wages jumping 13% for the year, while Information employees registered only a 2.7% annual increase. Competition for fewer restaurant and other service workers had had a dramatic effect on wage growth. Professional and Business Services workers enjoyed a 6.9% annual increase in hourly wages and Education and Health Services wages were up 6.8% but most other industries averaged a 5% increase.
Virtually every industry reported unadjusted unemployment rates higher than the month before as seasonal hiring abated from December to January. The two exceptions were the Information and Financial Activities industries, which dropped about 50 bps each in January. Currently, the highest industry unemployment rate (not seasonally adjusted) is in Mining and Logging (8.4%), although Leisure and Hospitality (8.2%) is not far behind. The lowest was in the Financial Activities industry (1.9%).
The percentage of workers who telework shot up in January as the Omicron variant increased infections and caused many businesses to re-close their offices and workplaces. December’s teleworking rate of 11.1% increased to 15.4% in January, according to the BLS’s supplemental data measuring the effects of the coronavirus pandemic on the labor market. The rate of telecommuting will likely continue to remain elevated compared to historical norms as employers discover that remote working can act as a hiring and retention inducement that boosts employee morale while productivity remains close to previous levels.
In other January BLS data, the number of unemployed leaving or quitting their jobs increased from 741,000 in December to 952,000 in January. The number of unemployed for 27 weeks or longer dropped from 2.01 million in December to 1.69 million in January. The number of those working part-time who want full-time work fell by 212,000 from last month to about 3.72 million, while the number of workers who prefer part-time positions decreased by 117,000 to about 20.2 million.
Workers marginally attached to the labor force fell by about 430,000 from last January to 1.62 million and the number of discouraged workers stood at 422,000, down 216,000. Persons marginally attached to the labor force are those who currently are neither working nor looking for work but indicate they want to and are available for a job and have looked for work sometime in the past 12 months.
The U6 unemployment rate, which includes part-timers for economic reasons and marginally attached workers, fell to 7.1% in January compared to 7.3% last month and 11.1% in January 2021.
Industry Focus
The service elements of the economy continued to dominate the jobs recovery with the bulk of January’s gain in the Leisure and Hospitality and Trade, Transportation and Utilities industries. Despite increased concerns from the Omicron variant, many people are ready to try to return to a more normal lifestyle by shopping, dining, and attending entertainment and sports events. The goods-producing industries either retrenched or eked out modest gains for the month.
- Almost 72% of the Leisure and Hospitality industry’s monthly gain of 151,000 jobs were in food services and drinking places (+108,200) with another 22,600 jobs added in the accommodation subsector. The arts, entertainment, and recreation sector added 20,100 jobs for the month, all in the amusements, gambling, and recreation subsector.
- The Trade, Transportation, and Utilities industry added 132,000 jobs in January with almost half in retail trade (+61,400). The general merchandise stores (+29,000) and health and personal care stores (+11,300) subsectors were the strongest retail contributors. Transportation and warehousing added 54,200 jobs in January, with couriers and messengers (+21,200) and warehousing and storage (+13,400) dominating. Wholesale trade added 16,400 jobs for the month with durable goods accounting for 10,700 of them.
- The Professional and Business Services industry gained 86,000 jobs in January with more than half of them in the high-paying professional and technical services sector (+45,500). The management and technical consulting services subsector accounted for 15,700 of those jobs. The administrative and waste services sector added 30,900 jobs, as temporary help services hiring (+26,300) returned.
- The Education and Health Services industry’s monthly gain of 29,000 jobs was predominately health care-related (+18,000), with a gain of 9,700 jobs in offices of physicians. Educational services added 12,900 jobs for the month as some school reopenings occurred around the country. The social assistance sector lost about 1,600 jobs as gains in childcare services were more than offset by losses in individual and family services.
- Net Government employment returned to positive territory with a gain of 23,000 jobs in January. There were 29,400 jobs added in local government education but mild losses in state (-9,000) and federal (-1,000) employment.
- The Information industry had a very strong monthly gain of 18,000 jobs, led by the motion picture and sound recording (+8,100) and data processing (+7,500) subsectors. Publishing (+3,700) and other information services (+3,100) had solid contributions as well.
- The Other Services sector had another solid month with 15,000 jobs added in January. Personal and laundry services added 6,300 and membership associations and organizations added 5,600 jobs for the month.
- The Manufacturing industry’s gain of 13,000 jobs in January was half of last month’s and was primarily in the durable goods manufacturing (+8,000) sector. There were solid gains in fabricated metal products (+5,000), machinery (+3,600), and nonmetallic mineral products (+3,300) but losses were seen in the transportation equipment (-9,500) subsector. Nondurable goods manufacturing gains were all in food manufacturing (+5,200).
- The Financial Activities industry added 9,000 jobs in January with much of that gain coming from real estate and rental leasing (+5,300). The finance and insurance sector added another 3,700 jobs to the total for the month.
- The Mining and Logging industry lost 4,000 jobs in January, with most of that loss in the oil and gas extraction (-2,800) subsector. Support activities for mining lost another 1,000 jobs for the month.
- The Construction industry also lost jobs in January (-5,000), with a deep decline of 9,500 jobs in heavy and civil engineering construction cancelling gains in construction of buildings (+4,000) and specialty trade contractors (+900).
