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Economy adds 49K jobs in January, unemployment falls to 6.3 percent

Economy adds 49K jobs in January, unemployment falls to 6.3 percent
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The U.S. added 49,000 jobs in January and the unemployment rate fell to 6.3 percent, a 0.4 percentage point drop, according to data released Friday by the Labor Department.

The uptick in jobs shows the recovery from the coronavirus recession resumed last month after December job losses, but the report underscored the deep damage yet to be repaired from the pandemic-driven economic crisis. 

“This jobs report suggests signs of a nascent overall recovery, but food insecurity, costs of caregiving, persistently high unemployment, and small business stagnation necessitate emergency relief that targets those being left behind  especially women, people of color, and lower income workers,” said Nicole Goldin, nonresident senior fellow at the Atlantic Council, in a Friday analysis.

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“Without further stimulus, our ability to get kids back in school and more fully reopen the economy will stymie consumer confidence, hiring, and investment.”

January’s drop in the unemployment rate and meager increase in hiring defied the consensus expectations of economists, who projected a gain of 100,000 jobs and an unchanged jobless rate.

Economists also warned that seasonal adjustments to the data would likely inflate January's job gains.

Solid hiring increases in professional services (97,000) and education (119,000) industries were offset by losses across a broad sector of the economy, said the Bureau of Labor Statistics (BLS). Notable job losses hit the leisure and hospitality (61,000), retail (38,000), health care (30,000), and transportation and warehousing (28,000) industries, according to the BLS.

The national decline in unemployment largely passed over Black and Asian workers, whose jobless rates were little changed. The national labor force participation rate stayed even at 61.4 percent, but the percentage of women in the labor force fell by 0.2 percent, the first decline since September.

"As the economy passed the worst of the third Covid wave, and vaccine optimism took hold, the labor market displayed a faint heartbeat. While favorable seasonal factors helped lift the monthly jobs count, the January gain nonetheless represented little progress toward recovery," wrote Gregory Daco and Lydia Boussour, economists at Oxford Economics, in a Friday analysis.

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The BLS also revised the initially reported November jobs gain of 336,000 down to 264,000 and the initially reported December loss of 140,000 jobs down to 227,000, cutting a total of 159,000 jobs from the final two months of 2020.

The U.S. has yet to recover roughly 10 million of the more than 20 million jobs lost to the coronavirus pandemic.

The U.S. economy is expected to rebound sharply when enough Americans are vaccinated to prevent coronavirus outbreaks, but economists insist that more fiscal aid is needed to help struggling families and businesses until the pandemic is under control.

The Senate passed a budget resolution early Friday morning that will be used to advance a massive economic aid and coronavirus response bill — with or without bipartisan support.

President Biden and congressional Democrats have stood behind the White House's proposed $1.9 trillion relief bill, and the measure could pass with unanimous Democratic support in the Senate. While Biden has sought support from Senate Republicans, he and congressional Democrats warned that they are ready to move ahead on a bill without bipartisan backing.

Updated at 9:27 a.m.