US economy added 49,000 jobs in January as recovery rebounds from winter slowdown
Economists expected employers to have added 50,000 jobs in January
The U.S. economy added 49,000 jobs in January, rebounding from a surprise employment decline in December as a slowdown in COVID-19 cases nationwide allowed states to ease lockdown measures on businesses.
The unemployment rate edged down to 6.3% — well below the April peak of 14.7%, but about twice the pre-crisis level, the Labor Department said in its monthly payroll report, released Friday. Economists surveyed by Refinitiv expected the report to show that unemployment remained unchanged at 6.7% and the economy added 50,000 jobs.
In total, the U.S. has recovered roughly half of the 22 million jobs lost during the first two months of the pandemic. There are still about 9.9 million more Americans out of work than there were in February before the crisis began, the report shows.
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The fall in the unemployment rate in part reflected adjustments by the Labor Department to population estimates used to calculate the unemployment rate and other data points. The new projections show the civilian labor force was 200,000 lower than previously estimated, employment was 180,000 less and unemployment was 20,000 less.
After a sharp contraction in March and April, the labor market quickly rebounded, adding 9.3 million jobs in the span of just three months. But since then, job growth has cooled dramatically each month, with economists increasingly warning that the recovery could plateau — or reverse itself.
The broader economic recovery has sputtered in recent months: Unemployment claims, a proxy for layoffs, have remained at about four-times their pre-crisis level. Consumer spending fell as Americans stayed home — and those who ventured out had limited options. GDP, the broadest measure of goods and services, grew just 1% in the final three months of the year, compared with an increase of 7.48% between the second and third quarters.
Employers overall cut 227,000 jobs in December, the Labor Department said in revised figures, a sharp decline of 72,000 from the initially reported 140,000. November's gains were also revised lower, to 264,000 from 336,000.
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"It may be a few months before warmer weather, less COVID-19, and more consumer confidence before consumers go on a shopping spree which will provide the real stimulus and job creation," said Dan North, senior economist at Euler Hermes North America.
The bulk of job growth last month took place in professional and business services, which added 97,000 positions, with temporary help services accounting for the majority of the gain. Job growth also took place in management and technical consulting services, which rose by 16,000, computer systems designs and related services, up 11,000, and scientific research and development services, which rose by 10,000.
The gains were partially offset by job losses in services to buildings and dwellings, which fell by 14,000, and in advertising and related services, down 6,000.
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"These data points show that the labor market has softened in the past few months and the need for fiscal stimulus remains high," said Sameer Samana, senior global market strategist at the Wells Fargo Investment Institute. "We continue to believe that Congress will pass another aid package, and along with the broader economic recovery and reopening should support equity markets."
President Biden and congressional Democrats are barreling forward with a nearly $2 trillion relief package, which is expected to include $160 billion for vaccine distribution, expanded unemployment benefits at $400 a week through September and a third stimulus check worth $1,400.
Democrats are eyeing mid-March as the deadline for the final passage of the bill, because that is when supplemental jobless aid is poised to expire.