WASHINGTON: US employers added more jobs than forecast last month, despite a surge in Covid-19 infections and related business closures.
Nonfarm payrolls increased by 467,000 in January after a gain of 510,000 gain in December, a Labor Department report showed Friday. The unemployment rate ticked up to 4%, and average hourly earnings jumped.
The median estimate in a Bloomberg survey of economists called for a gain of just 125,000 positions, though forecasts ranged widely. A variety of factors including Omicron and the methods used to account for workers who are home sick have made interpreting the January data challenging.
Overall, 3.6 million employed Americans were not at work due to illness in January, more than double the figure in December.
Nevertheless it was a surprising display of strength for the labour market, weathering record-high levels of coronavirus infections and the resulting absenteeism from work. The data further reinforce Federal Reserve Chair Jerome Powell’s description last week of the labour market as “strong” and validate the central bank’s intention to raise interest rates in March to combat the highest inflation in nearly 40 years.
The potential for a weak — or even negative — payrolls report, largely because of virus-related disruptions, was well telegraphed by officials in the days ahead of the report.
Average hourly earnings rose 0.7% in January and 5.7% from a year ago, further fanning concerns about the persistence of inflation. The average workweek dropped.
The faster-than-expected advance in pay could fuel market concerns about the Fed taking an even more aggressive stance on inflation this year.
The job gains were broad based, led by a 151,000 advance in leisure and hospitality. Transport and warehousing, retail trade and professional and business services also posted solid increases.
The solid employment growth in several categories may reflect businesses choosing to retain more holiday workers than normal in the face of a tight labour market.