WASHINGTON (Reuters) – Employment growth in the US recovered moderately in January and job losses in the previous month were deeper than initially thought, strengthening the case for a sizeable government relief package to help recover from the pandemic. of COVID-19.
The Department of Labor jobs report on Friday showed job losses in industry and construction, two sectors that have boosted the economy. There were more job losses in restaurants and bars. Transport retailers and employers have also laid off workers.
Millions of Americans are experiencing long periods of unemployment and permanent job losses, while others give up looking for work. President Joe Biden cited on Friday the weak report to pressure the US Congress to approve a $ 1.9 trillion recovery plan amid resistance from Republicans, now concerned about the increase in national debt.
“It is very clear that our economy is still in trouble,” said Biden in a speech to the country. “I see enormous pain in this country. I will act quickly. “
Biden’s fellow Democrats in Congress approved a draft budget that will allow them to force the stimulus in the coming weeks without Republican support.
The non-farm payroll increased by 49,000 jobs last month. The December data was revised to show 227,000 jobs lost instead of 140,000 as previously reported. Employment is 9.9 million jobs below its peak in February 2020.
The economy also created 250,000 fewer jobs in the 12 months to March 2020 than previously estimated. The Congressional Budget Office estimated that employment would not return to the pre-pandemic level before 2024. Economists polled by Reuters had predicted an increase of 50,000 payroll jobs in January.
“The weakness portrayed in today’s labor report opens the door for the Biden government to move forward with a higher spending package and provide relief for many Americans and companies that continue to fight the pandemic,” said Charlie Ripley, senior investment strategist at Allianz Investment Management.
The drop in payroll in December was the first in eight months and came amid new restrictions on businesses like restaurants and bars to delay the resurgence of coronavirus infections. Although business restrictions continued in the first half of January, there are grounds for cautious optimism, as some employment measures have stabilized since the second half of January, when authorities began to ease restrictions.
The government surveyed companies for the mid-month January job report. He noted that the survey response rate was “slightly below average”.
Nearly $ 900 billion in additional relief money provided by the government at the end of December and the accelerated distribution of vaccines for the virus could increase hiring in the coming months. In addition, the pace of COVID-19 infections appears to have peaked in early January.
“We hope that January will mark the lowest point for job creation in 2021,” said James Knightley, chief international economist at ING in New York. “Much stronger job data is likely from the second quarter.”
Shares on Wall Street rose. The dollar fell against a basket of currencies. US Treasury prices were lower.
(Graphic: The job hole facing Biden The job hole facing Biden 🙂
LONG ROAD TO RECOVER
Last month, the industry’s payroll decreased by 10,000 jobs, while employment at construction sites fell by 3,000.
Retailers eliminated 38,000 jobs and healthcare employment decreased by 30,000. The transport and storage industry lost 28,000 jobs. There were 61,000 job losses in the leisure and hospitality sector. But employment in professional and commercial services increased by 97,000, with temporary hiring accounting for almost all earnings.
Government payrolls increased by 43,000 jobs, increased by state and local government education.
Although the unemployment rate fell from 6.7% in December to 6.3% in January, this was because many people stopped looking for work. The unemployment rate has also been pulled down by people mistakenly classing themselves as “employed, but absent from work”. Without this classification error, it would have been 6.9%.
Just over 4 million Americans have been unemployed for more than six weeks, accounting for 39.5% of the unemployed in January. The number of people who lost their jobs permanently increased from 3.4 million in December to 3.5 million. These people may find it difficult to find work or earn higher wages the longer they remain unemployed.
The labor force participation rate, or proportion of working-age Americans who have or are looking for a job, dropped from 61.5% in December to 61.4%. The participation rate decreased significantly during the pandemic, with women being responsible for the largest share of dropouts.
This was attributed to the difficulties in securing daycare centers, as many schools remain closed for face-to-face learning.
“There is still a lot of work to be done to get back to maximum employment,” said Chris Low, chief economist at FHN Financial in New York.
The report also highlighted the so-called K-shaped recovery, where higher-paid workers are doing well, while lower-wage workers are losing. The continued decimation of jobs with lower wages boosted annual wage growth from 5.1% to 5.4% in December. The average workweek increased to 35 hours from 34.7 hours.
“Business and government will need to work together to implement policies and programs that close this divergent gap and ensure that displaced Americans can return to the workforce,” said Karen Fichuk, CEO of Randstad North America.
Reporting by Lucia Mutikani; Editing by Chizu Nomiyama and Andrea Ricci