Employment: Slight Rebound, Prior Losses Revised Even Lower

Bottom Line:  Nonfarm payrolls rose only slightly in January, below expectations for a strong rebound, as the BLS revised December data to show even large job losses.  Job losses in the retail trade and leisure and hospitality sectors were not unexpected given the volatility in those sectors, with shutdowns in some parts of the country lasting into January.  But losses in the health services sector, where elective procedures were deferred as hospitals hit capacity limits with virus cases, were somewhat surprising.  So too was the decline in manufacturing jobs, despite positive readings from most surveys.   On the plus side, public education and government jobs rebounded as schools reopened with some in-person learning in many parts of the country.The household survey showed a stronger gain in employment, up 200k, but the labor force fell over 400k, as people, likely long-term unemployed, fell out of the labor force.  Thus, the unemployment rate dropped to 6.3%, down 0.4% for the wrong reasons.Average hourly earnings were revised higher for December, and near expectations in January as most of the jobs lost in December were in lower-paying sectors.  Moreover, the jobs gained in January, especially in education, pay better than many of the service sector jobs that have yet to rebound.Overall, this report once again showed how fragile labor markets remain.   Looking forward, there is scope for a substantial rebound in service sector jobs as the vaccine distribution progresses.  But people falling out of the labor force, especially in the lower-paid sectors, will remain a structural headwind as many of these jobs won't return for many years after the pandemic.Payroll Employment rose by 49k in January, compared with market expectations for an increase of 460k. The prior 2 months were revised, lower in December by 87k and lower in November by 72k.Government jobs ROSE by 43k. Consequently, private sector jobs ROSE by 6k.  Private education jobs rose by 34k. State and Local education jobs rose by 85k.Overall employment is now -6.3% BELOW its year-ago level,  Over the past 12 months, 9,603k jobs have been shed.

In January, the job gains were in

The Unemployment Rate FELL by 0.4 percentage points in January to 6.3%, compared with market expectations for a no change at 6.7%.

Household employment rose by 201k while the labor force declined by 406k, resulting in a decrease in the number of unemployed of 606k.

The Labor Force Participation Rate FELL by 0.1 percentage points to 61.4%.

The Employment-Population Ratio ROSE by  0.1 percentage points to 57.5%.The number of people Working Part-Time for Economic Reasons FELL by 258k to 5,824k. while Long-Term Unemployment ROSE by 67k to 4,023k (accounting for 39.7% of the unemployed),  while the Mean Duration of Unemployment ROSE by 2.6 weeks to 26.0 weeks.There are now 10.1 million people officially unemployed. In addition, there are another 6,957k people who say they want a job but are not currently looking for one.  Finally, another 5,824k people are working part-time because of slack economic conditions.The Index of Aggregate Hours ROSE by 0.9%.  Hourly Earnings ROSE by 0.2% in January, above market expectations of 0.1%. Hourly earnings are now 5.4% ABOVE their year-ago level.

Weekly Earnings also ROSE by 1.1%, the result of the change in hourly earnings and a longer workweek. Weekly earnings are now 7.5% ABOVE their year-ago level. The Average Workweek ROSE by 0.3 to 35.0 hours, ABOVE the market consensus at 34.6 hours.