January’s jobs report showed better-than-expected growth, with 467,000 nonfarm jobs added last month. The unemployment rate rose 0.1 percentage points to 4.0%, and the labor force participation rate climbed to 62.2%.
The number of unemployed increased 194,000 to 6.5 million. There are now 602,000 more unemployed people than in February 2020, the last month before the pandemic-related closures.
Highlighted Sectors
The private sector added 444,000 jobs, with the service sector continuing to be the primary driver of job growth, accounting for 99% of private jobs added in January.
Leisure and hospitality was once again the strongest performing sector, adding 151,000 jobs. The industry continues to regain the large number of jobs lost during the pandemic.
Professional and business services continued to be one of the best performing sectors in the labor market, gaining 86,000 jobs in January.
The retail sector added 61,400 jobs, more than expected.
Transportation and warehousing grew by 54,200 jobs. Improvement in this sector will likely have a positive impact on the supply chain, which has been under severe strain over the last year and has negatively impacted many other industries.
Health care saw an increase in employment of 18,000. The industry is 378,400 jobs below its February 2020 level.
Manufacturing added an anemic 13,000 jobs in January as factories continued to shed jobs related to automobile production.
The construction sector lost 5,000 jobs last month as the pace of residential construction continued to slow, despite record housing prices.
Oil and gas extraction fell 2,800 in January, even though the crude oil benchmark in America has risen over $90 a barrel, a seven-year high, and natural gas is approaching $5 per million BTUs.
Government saw an increase of 23,000 jobs.
Earnings, Revisions, Miscellaneous
Average hourly earnings rose 23 cents to $31.63, a 0.7% monthly increase. January was the 10th consecutive month of nominal earnings increases. Wage growth outpaced inflation in January, but real wages are still down over the last year.
Each month’s job report from 2021 was revised, but these revisions mostly offset one another. In total, employment was revised downward by 617,000 jobs for 2021.
Prime age (25-54 years old) employment grew by 907,000 and is now 701,000 (0.7%) below its February 2020 level.
The labor force grew 1.4 million in January and is 896,000 below February 2020.
The employment-population ratio increased to 59.7%, which is 1.5 percentage points below February 2020.
Abridged Summary
January’s jobs report showed larger growth than expected. More people are returning to the labor market as temporary government transfer payments expire and as fears related to COVID-19 wane. The nation is 2.9 million jobs, about 2%, below its February 2020 level. Although the headline unemployment rate (called U-3) rose to 4.0%, that was because more people returned to the labor market. Nominal wages grew faster than the latest inflation report, indicating that real wages are increasing after declining over the previous year.
Recommendations
With college degree unemployment now down to just 2.3% and employment in this group 1.5 million higher than February 2020, there is no reason for the student loan moratorium to be extended again; the program should be retired.
The Federal Reserve should act immediately to rein in inflation.
The White House’s animosity toward reliable American energy is hampering growth in that industry and should be reversed.