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Employment: Strong Across The Board

February 4, 2022
Bottom Line: Payroll growth surprised to the upside in January, despite higher jobless claims during the survey week. Moreover, December and November payrolls, which had come in well below expectations, were revised sharply higher. The household employment report, used to calculate the unemployment rate, rose even more, up over 1.1 million, but the unemployment rate edged higher as the labor force participation rate increased. Job gains were broad across the services sectors, while goods-producing sectors saw only small gains, with construction losing jobs, likely due to weather. Average hourly earnings grew sharply, which was especially notable given the breadth of job gains (typically months with strong jobs gains see modestly lower wages as most o the new jobs are in lower-paying sectors). Average hours worked ticked modestly lower as employers brought on new employees. Overall, this was a remarkably strong labor report, especially since there were hints from other reports of possible weakness in January. It will likely only strengthen the narrative that the Fed needs to tighten policy and certainly confirms Chair Powell's bullish assessment of the labor market at the January FOMC press conference.
Payroll Employment
rose by 467k in January, compared with market expectations for an increase of 125k. The prior 2 months were revised, higher in December by 311k and higher in November by 398k.

jobs ROSE by 23k. Consequently, private sector jobs ROSE by 444k.  Overall employment is now 4.6% ABOVE its year-ago level.  Over the past 12 months, 6,612k jobs have been created. In January, the job gains were in :
  • Trade, Transportation & Utilities (+71k with 61k of those in Retail Trade),  
  • Professional & Business Services (+86k with the addition of 26.3k in Temp Help Services),  
  • Leisure & Hospitality (+151k),
  • Government (+23k), Information (+18k),
  • Education & Health Services (+16k),
  • Other Services (+15k), and Manufacturing (+13k).
Jobs were shed in Construction (-5k).
The Unemployment Rate ROSE by 0.1 percentage points in January to 4.0%, compared with market expectations for a no change to 3.9%.  Household employment rose by 1199k while the labor force increased by 1393k, resulting in an increase in the number of unemployed of 194k.
The Labor Force Participation Rate ROSE by 0.3 percentage points to 62.2%. The Employment-Population Ratio ROSE by  0.2 percentage points to 59.7%.
The number of people Working Part-Time for Economic Reasons
FELL by 278k to 3.62 million, while Long-Term Unemployment FELL by 317k to 1,691k (accounting for 26.0% of the unemployed),  while the Mean Duration of Unemployment FELL by 4.0 weeks to 24.6 weeks. There are now 6.5 million people officially unemployed. In addition, there are another 5.7 million people who say they want a job but are not currently looking for one.
The Index of Aggregate Hours FELL by 0.3%, combining the solid gain in private payroll employment and the shorter workweek.
Hourly Earnings ROSE by 0.7% in January, above market expectations of 0.5%. Hourly earnings are now 5.7% ABOVE their year-ago level.

Weekly Earnings
also ROSE by 0.2%, the result of the change in hourly earnings and a shorter workweek. Weekly earnings are now 4.2% ABOVE their year-ago level.
The Average Workweek FELL by 0.2 to 34.5 hours, BELOW the market consensus at 34.7 hours.