Economists and Wall Street experts were expecting a major loss of jobs or modest increase in employment for the month of January. Instead, surprising all of the prognosticators, employment boomed with the addition of 467,00 jobs. The unemployment rate was little changed at around 4%, the United States Bureau of Labor Statistics reported Friday.
Of note, employment growth continued in leisure and hospitality, in professional and business services, retail trade, transportation and warehousing. A record-setting surge in Omicron and Covid-19 cases was thought to derail growth, but it didn’t have the devastating effect economists anticipated.
The palpable concerns were based on the fact that January’s data was collected during the first few weeks of the year—when cases topped 800,000 a day. Millions of workers didn’t go into the office because they tested positive for Covid-19. Others were let go because they refused to get their shots. With the spike in cases, schools were closed and parents needed to tend to childcare matters. The White House, due to these and related events, started managing expectations of lackluster or large numbers of job losses.
ADP, the large payroll processing firm, offers its own jobs report based upon its customers’ employment data. ADP reported Wednesday, “Companies cut jobs in January for the first time in more than a year, as the spread of the Covid omicron variant appeared to hit hiring.”
ADP added, “Private payrolls fell by 301,000 for the month, well below the Dow Jones estimate for growth of 200,000 and a marked plunge from the downwardly revised 776,000 gain in December. It was the first time ADP reported negative job growth since December 2020.”
On the positive side, according to the Labor Department’s data, the economy endured an Omicron surge and staffing shortages. In light of the waning of the virus outbreak, economists are predicting that the job market will continue to run hot. Workers who were sick, parents looking after their children and those concerned with catching or spreading the virus will likely start reentering the job market.
The irony of a strong jobs report is that higher inflation will accompany the higher wages needed to pay workers in a tight, competitive labor market. Additionally, the good news will embolden the Federal Reserve Bank to hike interest rates, which becomes a tax on the population.
January Jobs Report Highlights
- Non-farm payrolls: +467,000 vs. +125,000 expected and a revised +510,000 in December
- Unemployment rate: 4.% vs. 3.9% expected, 3.9% in December
- Average hourly earnings, month-over-month: 0.7% vs. 0.5% expected and a revised 0.5% in December
- Average hourly earnings, year-over-year: 5.7% vs. 5.2% expected, 4.7% in December
- Average hourly wage growth of 0.7% in January topped expectations of a 0.5% rise. Annual wage growth rose to 5.7% from December’s initially reported 4.7%.
- Job gains for November and December were revised up by more than 700,000. The initially reported gain of 199,000 jobs in December was revised to 510,000.
- The share of the working age population (age 16 and up) participating in the labor force rose to 62.2%, vs. expectations of 61.8%.
- According to the monthly survey of households, 6.5 million Americans are unemployed, down from 23.1 million in April 2020, but up from 5.8 million in February 2020.
There are some skeptics of the bountiful numbers. ZeroHedge, a widely followed chronicler of Wall Street and the securities markets, wrote, “Not a single Wall Street analyst out of 78 expected a jobs number anywhere close to this. The actual print was double the highest forecast.” ZeroHedge questioned the accuracy of the data collected, adding, “Not only did January payrolls print at a huge 467K, almost four times higher than the 125K expected (and as a reminder, Goldman expected -250K)…but the BLS also revised December payrolls from 199K to 510K.”
Putting aside the numbers and data, the job market looks solid. If you are seeking out a new job, now is the time to do so. The stock market has been selling off lately, and so have cryptocurrencies. There’s no guarantee that another strain of the virus can be lurking around the corner.
Historically, February is a great time to seek out a new job. Budgets and headcount have been approved, bonuses paid out and the wheels start moving again after the holiday season and New Year ground to a slowdown. Take advantage of this time, while the market is hot and the future is uncertain.
Source: Jack Kelly via Forbes.com