U.S. Employers Added 467,000 Jobs in January

The U.S. economy created far more jobs than expected in January. According to data from Labor Department, nonfarm payrolls increased by 467,000 jobs last month.

Better than Expected Jobs Data

The January jobs data was better than the expectations amid the fast-spreading Omicron cases. “The labor market started the year off on a stronger-than-expected note defying expectations that the rapid spread of Omicron would lead to a temporary pullback”.  Oxford Economics chief US economist Kathy Bostjancic said in a note to clients. The US jobs market also closed out 2021 on a stronger footing. November and December combined added a whooping 709,000 jobs as the revised data.

Unemployment Stands at 4%

The nation’s unemployment rate edged up slightly in January to 4 percent. The unemployment percent stood at 3.9% during December 2021. However, number of people either working or actively looking for a job rose to 62.2%.  This is the highest level since the start of pandemic in March 2020. The upbeat report ended days of anxiety among economists and White House officials. The desperately tried to prepare the nation for a disappointing payrolls number. “This is a strong jobs report,” said Chris Low, chief economist at FHN Financial in New York.

Economists polled by Reuters had forecast 150,000 jobs would be added in January. Estimates ranged from a decrease of 400,000 to a gain of 385,000 jobs. Part of the broad increase in payrolls likely reflected low layoffs after the holiday hiring season. There were 10.9 million job openings at the end of December. The labor market resilience could alter expectations that economic growth would slow significantly in the first quarter. The economy grew at a 6.9% annual rate during the fourth quarter.

Inflation Factor

US inflation is running at its highest level in nearly 40 years and those higher prices erode purchasing power. Soaring costs for essentials like food, gasoline, and rent are also especially hard on low-income households. Finally, too much inflation is bad for consumer confidence, which is bad for the economy. The Fed has a dual mandate to achieve maximum employment while keeping inflation under control. Currently, inflation is running far above the Fed’s target rate of 2 percent.

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