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WORKSPAN
WORKSPAN DAILY |

U.S. Economy Kicks off 2021 with Job Gains

The United States economy added 49,000 jobs in January, a slight rebound after job losses closed out 2020, according to the Labor Department’s jobs report on Friday.  

The unemployment rate fell to 6.3%, which is down significantly from the high of 19.2% in April, but still much higher than the 3.5% rate in December 2019.

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There were large job gains in business and professional services, the report revealed. Many sectors, though, lost jobs last month. The leisure and hospitality sector lost 61,000 jobs in January, following a steep decline of 536,000 in December. Retailers, health care companies and warehouses cut jobs in January.

“The details were weaker than the headline figures suggest. Whereas the downwardly-revised 227,000 fall in payrolls in December was driven entirely by the leisure and hospitality sector, the weakness last month was more widespread,” Andrew Hunter, senior U.S. economist for Capital Economics, wrote in a note Friday.

Other measures in the January jobs report pointed to some stabilization in labor market conditions. The number of permanent job losers held steady at about 3.5 million in January, though that remained 2.3 million higher than from February 2019. And the number of individuals on temporary layoffs decreased in January to 2.7 million, coming down precipitously from a pandemic-era high of 18 million from April.



















It’s possible that Friday’s report understated the degree of improvement in the labor market in just the past few weeks, according to some experts. The survey week for the monthly jobs report took place during the week including 12th of the month, or around the time when initial jobless claims spiked to a five-month high of more than 900,000. Claims have since retreated from those levels.

As vaccine rollout continues and winter weather begins to subside, there’s optimism that the economy will experience a swift recovery in the coming months.

“Hiring will pick up as restrictions are relaxed but gains will be stronger once the economy can fully reopen,” Rubeela Farooqi, chief U.S. economist for High Frequency Economics, told Yahoo Finance. “Until then, generous fiscal support will provide a safety net for households and businesses.”

About the Author

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Brett Christie is the managing editor of Workspan Daily.


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