U.S. labour market posts strong job gains despite Omicron surge
News wire -- The U.S. economy created far more jobs than expected in January despite the disruption to consumerfacing businesses from a surge in COVID-19 cases, pointing to underlying strength that should sustain the expansion as the Federal Reserve starts to raise interest rates.
The Labor Department's closely watched employment report, cited by Reuters, also showed a whopping 709,000 more jobs were added in November and December than previously estimated. Wage gains accelerated last month and the labor pool expanded.
The upbeat report ended days of anxiety among economists and White House officials who had frantically 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. "The odds of quelling inflation without a recession look better today than yesterday."
Nonfarm payrolls increased by 467,000 jobs last month, the survey of establishments showed. 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.
Employment is 2.9 million jobs below its pre-pandemic peak.
Part of the broad increase in payrolls likely reflected low layoffs after the holiday hiring season because of worker shortages. Though the drop in actual employment in January was in line with prior years, there were large differences at the industry level.
The government also reported that 374,000 more jobs were created in the 12 months through March 2021 than previously reported.
The labor market resilience could alter expectations that economic growth would slow significantly in the first quarter, after consumer spending exited 2021 with a whimper. The economy grew at a 6.9% annualized rate in the fourth quarter. Growth estimates for the first quarter are below a 2% pace.
Strong employment gains, accompanied by the biggest annual increase in wages since May 2020, pave the way for the U.S. central bank to raise interest rates in March by at least 25 basis points to tame high inflation. Economists expect as many as seven rate hikes this year.