Payrolls rose far more than expected in January despite surging omicron cases that seemingly sent millions of workers to the sidelines, the Labor Department reported Friday.
Nonfarm payrolls surged by 467,000 for the month, while the unemployment rate edged higher to 4%, according to the Bureau of Labor Statistics. The Dow Jones estimate was for payroll growth of 150,000 and a 3.9% unemployment rate.
The stunning gain came a week after the White House warned that the numbers could be low due to the pandemic.
Covid cases, however, have plunged nationally in recent weeks, with the seven-day moving average down more than 50% since peaking in mid-January, according to the CDC. Most economists, while expecting January’s number to be weak, see a further rebound coming in the months ahead.
Along with the big upside surprise for January, massive revisions sent previous months considerably higher.
December, which initially was reported as a gain of 199,000, went up to 510,000. November surged to 647,000 from the previous reported 249,000. For the two months alone, the initial counts were revised up by 709,000. The revisions came as part of the annual adjustments from the BLS that saw sizeable changes for many of the months in 2021.
“The benchmark revisions helped the numbers a bit just because it moved out some of the seasonal factors that have been at work. But overall the job market is strong, particularly in the face of omicron,” said Kathy Jones, chief fixed income strategist at Charles Schwab. “It’s hard to find a weak spot in this report.”
For January, the biggest employment gains came in leisure and hospitality, which saw 151,000 hires, 108,000 of which came from bars and restaurants. Professional and business services contributed 86,000, while retail was up 61,000.
There was more good jobs news: The labor force participation rate rose to 62.2%, a 0.3 percentage point gain. That took the rate, which is closely watched by Fed officials, to its highest level since March 2020 and within 1.2 percentage points of where it was pre-pandemic.
A more encompassing level of unemployment that counts discouraged workers and those holding part-time jobs for economic reasons dropped to 7.1%, 0.2 percentage point decline and to just above its pre-pandemic level.
The job gains brought employment back to about 1.7 million below where it was in February 2020, a month before the pandemic declaration.
Stock market futures declined on the report while government bond yields rose sharply. Markets have been anticipating an inflation-fighting Fed to hike interest rates at least five times in 2022, so the surprisingly powerful jobs market is likely to do little to dissuade that sentiment.
“They definitely will feel more behind the curve,” Jones said. “I don’t think there’s a 50 basis point hike coming in March, but I think speculation about it will build and that will continue to push up on yields.”
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