The economy created +49k jobs in January 2021, right around expectations. However, the report was not nearly as strong as it looked as there were two nasty revisions. The job loss in December, which had been previously reported as -140k, was revised down to an ugly -227k, and the November gain was revised down another -72k. So, there was a total downward revision over the two months of -159k, clearly outweighing January’s +49k gain. After the February 5th report, the economy has recovered 55.8% of the jobs lost in March and April of 2020. But back in November, the economy had recovered 56.6%; we’ve actually lost ground. We still have 9.9 million fewer jobs in the economy than before vile COVID reared its ugly head.
There were small but unexpected losses in construction and manufacturing of -3k and -10k, respectively. Transportation and warehousing jobs fell -28k after December’s -24k, perhaps due to post-holiday layoffs. But once again, it was shutdowns and restrictions that drove larger losses of -38k in retailing and -61k in leisure and hospitality, after a devastating loss of -536k in December. Significant gains came in government at +43k, and of course in professional and business services at +97k – this category almost always has one of the biggest gains since it’s one of the biggest categories.
The unemployment rate dropped from 6.7% to 6.4%, the lowest since before COVID, but part of the decline was because the labor force shrunk. At this point, the labor force participation rate is probably more important and that shrank 0.1% to 61.4%, a 44 year low. In a similar measure, the employment/population ratio ticked up 0.1% but outside of the pandemic, it’s still at a 38 year low.
