The U.S. added far more jobs than expected—467,000 in January—with the unemployment rate changing little at 4.0%, despite the omicron variant surge, according to the latest data from the U.S. Bureau of Labor Statistics released Friday. Employment growth continued in leisure and hospitality, in professional and business services, in retail trade, and in transportation and warehousing, the Labor Dept. reported.
Key findings
- Total nonfarm payroll employment increased by 467,000 in January, compared with an average monthly gain of 555,000 in 2021. Nonfarm employment has increased by 19.1 million since April 2020 but is down by 2.9 million, or 1.9%, from its pre-pandemic level in February 2020. In January, employment growth continued in leisure and hospitality, in professional and business services, in retail trade, and in transportation and warehousing.
- Both the unemployment rate, at 4.0%, and the number of unemployed persons, at 6.5 million, changed little in January. Over the year, the unemployment rate is down by 2.4 percentage points, and the number of unemployed persons declined by 3.7 million.
- Employment in leisure and hospitality expanded by 151,000 in January, reflecting job gains in food services and drinking places (+108,000) and in the accommodation industry (+23,000). Since February 2020, employment in leisure and hospitality is down by 1.8 million, or 10.3%.
- Professional and business services added 86,000 jobs. Job gains occurred in management and technical consulting services (+16,000), computer systems design and related services (+15,000), architectural and engineering services (+8,000), and other professional and technical services (+7,000). Employment in temporary help services continued to trend up (+26,000). Employment in professional and business services is 511,000 higher than in February 2020, largely in temporary help services (+185,000), computer systems design and related services (+161,000), and management and technical consulting services (+151,000).
- Retail trade employment rose by 61,000 in January. Job growth occurred in general merchandise stores (+29,000); health and personal care stores (+11,000); sporting goods, hobby, book, and music stores (+7,000); and building material and garden supply stores (+6,000). Retail trade employment is 61,000 above its level in February 2020.
- Employment in transportation and warehousing increased by 54,000 in January and is 542,000 higher than in February 2020. In January, job gains occurred in couriers and messengers (+21,000), warehousing and storage (+13,000), truck transportation (+8,000),and air transportation (+7,000). All four of these component industries have surpassed their February 2020 employment levels, with particularly strong growth in warehousing and storage (+410,000) and couriers and messengers (+236,000).
What the industry is saying
“There is both good and bad news as the strengthening labor market pushes up interest rates. Nearly half a million net new payroll jobs were added in January; that figure is over a million if we include independent self-employed business owners. Such gains also mean that the Federal Reserve will stick to—or even accelerate—its plan to raise interest rates. Inflation has been running at a 40-year high, and strong job gains along with rising wages will not tame price pressures. That is why the 10-year Treasury bond yield is at the highest rate since the onset of the pandemic at 1.9%. Mortgage rates will follow this upward path as well.
More residential construction and industry trade contractor jobs were added and are now far ahead of the numbers seen before the pandemic, implying more homebuilding and more supply are forthcoming. Commercial real estate construction jobs are still down even though in-office jobs such as accounting, legal service, and management consultancy jobs, are all reaching new record highs. The work-from-home trend evidently remains strong.
What can we expect? Apartment rents look to accelerate as many new workers seek their own housing. Homebuying demand, however, will be mixed: more jobs help, but higher mortgage rates hinder the decision to buy.” – Dr. Lawrence Yun, National Association of Realtors® chief economist
“Following the early January rise, COVID cases and hospitalizations have been on a welcome decline since mid-month, pointing toward a post-pandemic horizon this year. This week’s decline in jobless claims to the levels seen in 2019 further underscore the significant economic and employment recovery. For many companies, the main challenge remains recruiting people to fill 10.9 million open positions, and taking necessary steps to retain high-performers. As we progress toward the endemic stage of the health situation, employment is expected to rebound, in tandem with continued economic growth.
Real estate markets have defied the month’s low temperatures in January, maintaining an active pace. With mortgage rates on the rise, determined buyers have been actively seeking to close on sales contracts in a bid to lock-in predictable rates and monthly costs for the long term. With new listings still lagging, home prices picked up speed during the month. However, along with improvement in the health outlook and employment, the horizon looks brighter for housing toward spring. We expect new home construction to continue bringing supply to market, and homeowners to boost new listings in the months ahead, ready to move forward with pandemic-delayed plans.” – Realtor.com senior economist George Ratiu
“Faster job growth, more labor force participation, higher wage growth, and substantial upward revisions to November and December payroll numbers all point to a job market that is even stronger than we had thought. The job market tightened further in January, despite the impacts of the omicron variant.
“Some of the strongest employment gains were in sectors such as leisure and hospitality, which continues to recover from pandemic-induced slowdowns. Also notable was the increase in transportation and warehousing jobs, evidence that progress is being made on supply-chain constraints as additional workers enter the sector. Total construction employment dropped, but increased for construction employees involved in residential building.
“The increase in the labor force participation rate is positive in that it shows that employment still has room to run, and that many people who had left the full-time labor force may well venture back in eventually. While we still expect that the unemployment rate will fall to 3.5% by the end of 2022, there is the potential for it to drop lower if this pace of hiring were to continue.
“Average hourly earnings are up 5.7% over the year. While still below the pace of inflation, meaning that workers’ purchasing power remains crimped, rising wages will support housing demand this year.” – MBA SVP and chief cconomist Mike Fratantoni
To read the full report, click here.
