The recovery in the US labour market disappointed for a second month in January, with only modest job growth that highlights persistently difficult prospects for millions of unemployed and bolsters calls for more stimulus.
Nonfarm payrolls increased by 49 000 from the prior month after a downwardly revised 227 000 December decrease, while the unemployment rate fell to 6.3%, according to a Labor Department report Friday. The labour force participation rate declined as more people left the workforce.
The median estimates in a Bloomberg survey of economists called for a 105 000 gain in payrolls and an unemployment rate of 6.7%. Payroll estimates ranged from a 250 000 monthly decline to a 400 000 increase.
Ten-year Treasury yields slid after the report to trade at about 1.155% — from about 1.17% just before. Stock futures maintained gains on expectations of additional fiscal stimulus.
The January data may elicit more urgent calls for another pandemic relief package. President Joe Biden has proposed a $1.9 trillion package, but many Republicans prefer to hold off on more assistance and wait for the December $900 billion aid package to filter through the economy.
The weaker-than-expected report reflected job cuts in retail trade, transportation and warehousing, and leisure and hospitality, while other industries saw only modest gains. The latest figures underscore a labor market that continues to struggle even as other parts of the economy have rebounded.
Restrictions on activity and businesses have eased, but fears of more contagious virus variants may curb consumer activity. Pandemic-sensitive sectors like leisure and hospitality will likely remain depressed until widespread vaccinations allow for robust spending on services.
The jobs report also included the Bureau of Labor Statistics’ annual benchmark revision, which aligns establishment data with state unemployment insurance tax records. The revisions impact payrolls, hours and earnings data.
Weak industry breakdown
- Leisure/hospitality payrolls fell 61k after 536k drop in Dec.
- Health care/social assistance fell 40.8k
- Retail trade declined 37.8k
- Transportation/warehousing dropped 27.8k after 24.1k drop
- Manufacturing fell 10k in January
Average hourly earnings rose 0.2% from the prior month and increased 5.4% from a year earlier. These figures have been challenging to interpret during the pandemic given the scale and distribution of job losses and gains. Average weekly hours rose to 35 from 34.7.
-With assistance from Kristy Scheuble and Liz Capo McCormick.