PeopleScout Jobs Report Analysis – January 2021

The U.S. economy gained 49,000 jobs in January. The modest growth follows December’s drop in employment, and suggests growth remains sluggish. The economy is still more than nine million jobs short of pre-pandemic levels. The unemployment rate fell to 6.3%. Year-over-year wage growth was at 5.4%.

The Numbers

49,000: The U.S. economy added 49,000 jobs in 2021

6.3%: The unemployment rate fell to 6.3%.

5.4%: Wages rose 5.4% over the past year.

The Good

Though the numbers in January’s jobs report reveal little to celebrate, the addition of 49,000 jobs averts a second straight month of losses, as the New York Times reports some economists expected. The most significant gains were made in the business and professional services sector, with more modest gains in financial services.

The Bad

As the Washington Post reports, the jobs report reveals that the economy finished 2020 even weaker than originally indicated. November’s jobs gains were adjusted down 72,000 from the original estimates, and revised estimates now show a decrease of 227,000 jobs in December, rather than the 140,000 initially reported.

Some of the most significant losses came in leisure and hospitality as restaurants continued to struggle. The retail sector also shed jobs after boosted hiring during the holiday season. Even transportation and warehousing, which had previously remained a bright spot, reported a loss of nearly 28,000 jobs.

Though the decrease in the unemployment rate may initially seem like good news, the Wall Street Journal reports that the drop is largely because many workers dropped out of the labor force and were no longer actively looking for jobs.

The Unknown

January’s jobs report comes as coronavirus vaccinations continue around the country and as congress moves forward with President Biden’s $1.9 trillion aid package. Economists will be watching the impact of the additional federal aid and the rising number of vaccinated Americans.