U.S. employers unexpectedly added a booming 467,000 jobs in January even as COVID’s omicron variant kept millions of Americans out of work.
The unemployment rate, which is calculated from a different survey of households, rose from 3.9% to 4%, the Labor Department said Friday.
Unemployment, however, rose for an encouraging reason. Many Americans streamed into a favorable labor market. The share of adults working or looking for jobs increased sharply from 61.9% to 62.2%, though that’s still well below the pre-COVID mark of 63.4%.
Economists surveyed by Bloomberg had estimated a modest 150,000 jobs were added last month but many projected an outright decline.
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Even more encouraging: Job gains for November and December were revised up by a whopping 709,000, more than doubling what were weak average monthly advances of 224,000 during that period to 578,000.
Nearly 9 million workers called in sick in early January, largely because of omicron, Morgan Stanley said, citing Labor Department figures. The variant has proven highly contagious but relatively mild compared to previous COVID strains.
Nearly 80% of the idled workers are still counted as employed in Labor’s survey of establishments because they receive paid sick leave benefits, says economist Lydia Boussour of Oxford Economics. But that means as many as 2 million or so may have been dropped from payrolls because they didn’t get a paycheck the week that Labor conducted its survey.
Also, 6 million people said they couldn’t work because their employer closed or lost business due to the pandemic, nearly double the December figure, Labor said.
Yet the sidelined workers likely were at least partly offset by fewer-than-normal year-end layoffs. Many companies are hesitant to let workers go amid widespread labor shortages, says Goldman Sachs economist Spencer Hill.
Also, many school janitors and other support staff are typically cut in January. But since fewer school workers were employed because of the pandemic, fewer were expected to be laid off, leading to a gain in education employment after seasonal adjustments, Hill says. As a result, local education added 29,000 jobs last month.
The total payroll gains were broad-based across industries. Leisure and hospitality, which includes restaurants and bars and was hit hardest by the pandemic, led the job gains with 151,000. Professional and business services added 86,000 retail, 61,000 transportation and warehousing, 54,000.
So far, the U.S. has recouped 19.1 million, or 86%, of the 22 million jobs lost early in the pandemic, leaving it 2.9 million jobs shy of its pre-crisis level.
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Omicron appeared to have delivered a punishing blow to the economy last month. Restaurant reservations tracked by OpenTable were down 20% last month compared to 2019 levels, according to Goldman Sachs. And Homebase, which provides payroll software to small businesses, said the number of employees working, hours worked and business open all tumbled.
