Meager 49K jobs added in January

Barely makes dent in 10M jobs lost since virus intensified last year

WASHINGTON — America’s employers barely added jobs last month, underscoring the viral pandemic’s ongoing grip on the economy and likely adding momentum to the Biden administration’s push for a bold rescue aid package.

The increase of just 49,000 positions in January made scarcely any dent in the nearly 10 million jobs that remain lost since the virus intensified nearly a year ago. The tepid increase followed a decline of 227,000 jobs in December, the first loss since April.

The unemployment rate fell sharply in January from 6.7% to

6.3%, the Labor Department said Friday. Most of the drop in unemployment occurred because some people out of work found jobs, but others stopped looking for work and were no longer counted as unemployed.

Even last month’s small job gain benefited from a technical adjustment to the government’s data. And without an increase of

80,000 temporary jobs, the economy would have posted a net loss for January.

“What you have is a lousy report that shows a stalling recovery,” said Nela Richardson, chief economist at the payroll processor ADP.

Soaring new virus infections in late fall had forced tighter business restrictions in California, New York, Virginia and other

states, thereby reducing the need for workers. Consumers have also been less willing to dine out, travel or go to concert halls and other venues as the pandemic has persisted. Some business closures, notably in California, have since been eased or lifted, but in many cases too late to affect last month’s jobs data.

Economists are increasingly hopeful that as vaccinations reach a critical mass in the coming months and the government provides further stimulus, the economy and the job market will strengthen much faster than they did after previous recessions. Bank of America estimates that growth could reach 6% this year, which would be the fastest since 1984.

“The tunnel we’re in does have a light,” Richardson said. “It’s later this year when the U.S. economy is reopened, and after widespread inoculation and maybe stimulus. This is not the end of the story by any means. But it does show the recovery could use more support.”

Gregory Daco, chief U.S. economist at Oxford Economics, forecasts that 6.6 million jobs could be regained by the end of this year, though that would still leave the U.S. economy several million short of its pre-pandemic level.

Last month, service industries that deal with customers in person again posted the sharpest job losses as millions of consumers continue to hunker down at home. Within the service sector, restaurants, bars and hotels slashed 61,000 jobs. Retailers cut nearly 38,000 jobs. Employment in transportation and warehousing fell by 28,000.

Those declines probably would have been even worse if not for a quirk in the government’s calculations. The government uses seasonal adjustments to try to filter out the impact of short-term changes that don’t reflect underlying economic trends. One such short-term change involves temporary retail employees who are hired for the holiday shopping season.

Retailers typically hire extra staff for the holiday season and then let them go in January. The government’s seasonal adjustments factor in this pattern to avoid showing a huge job gain before the holiday season and then a huge job loss afterward. This time, though, holiday hiring was weaker because of the pandemic, and so layoffs in January weren’t as large as they typically are. As a result, the seasonal adjustment process likely inflated last month’s hiring gain.

Women continue to be hurt disproportionately by the economic damage from the pandemic, which has led some of them to quit jobs to care for children or eliminated the jobs that many held in the hospitality industry. The proportion of women who either have a job or are looking for one declined in January, By contrast, the proportion for men remained flat.

The hardships that millions of Americans are suffering have fueled President Joe Biden’s push for a $1.9 trillion rescue aid package.