Nonfarm payroll employment in the U.S. rose by 49,000 in January, barely returning to a monthly gain after December 2020's downwardly revised loss of 227,000 jobs, data from the U.S. Labor Department showed.
The small employment gain came in around expectations from the economists polled by Econoday, but the Labor Department report also showed downward revisions to the prior two months' totals. The agency had originally pegged the jobs decline in December 2020 at 140,000, but it revised the losses to 227,000. The data for November 2020 was also updated to show a gain of 264,000 jobs, down from 336,000.
"The labor market's recovery is only stumbling along," Wells Fargo senior economist Sarah House wrote in a research note, though she added that it should "get back on track" as COVID-19 vaccinations pick up and additional fiscal stimulus hits the economy.
The unemployment rate did see a significant dip in January, falling to 6.3% from 6.7% in December 2020. But about two-thirds of the decline appears to be due to people leaving the labor force, as unemployment fell by 606,000 while 201,000 jobs were added, Jefferies chief financial economist Aneta Markowska wrote in a note to clients, citing the household survey data. At 61.4%, the labor force participation rate was down 0.1 percentage point month over month and was 1.9 percentage points below its February 2020 level.
A broader measure of unemployment, which captures discouraged workers and those who are working part-time but would like to work full-time, dropped to 11.1%, from 11.7% in December 2020, but remains far above its pre-pandemic levels.
Overall, nonfarm payroll employment remains 9.9 million below its level in February 2020, before COVID-19 became a pandemic and led to a historic cratering of economic activity.
The professional and business services sector saw a notable jobs gain of 97,000, with most of that coming from temporary help services accounting, the report said. Both the public and private education sectors also saw increases, with local and state government education jobs rising by 85,000 and private education seeing gains of 34,000. The wholesale trade sector added 14,000 jobs in January, and mining jobs grew by 9,000.
But those gains were offset by declines in other sectors, which spread beyond the hard-hit leisure and hospitality segment of the economy. That sector lost 61,000 jobs in January, a much smaller decline than the 536,000 jobs it lost in December 2020.
Retail trade jobs were down by 38,000, while healthcare employment fell by 30,000. The transportation and warehousing sector also lost 28,000 jobs, while manufacturing shed 10,000 jobs after eight months of gains. Construction employment was mostly flat, with a decline of 3,000 jobs.
"Weakness was more widespread in January and suggests that other industries are not fully insulated from the economy's winter soft patch," wrote House, of Wells Fargo, though she said warmer weather should boost food and leisure employment.
