Economic Improvement Ticks Up Just a Bit in Hopefully a Sign of Continued Recovery
With January already in the books, the employment story of the new year thus far is very slight but by no means insignificant improvement across the labor market as a whole with a small reduction in the unemployment rate and a small net increase in non-farm jobs.
This month-to-month consistency with the hint of an upward trajectory is hopefully an indication that the trend of recovery slowing to a halt through the fall and into the beginning of the winter season has now again reversed in a positive direction.
Seemingly in light of the milestone that the fresh calendar represents, this month’s employment situation report from the Bureau of Labor Statistics takes extra care to contextualize last month’s employment numbers in relation to the pandemic, although that context has been difficult to avoid throughout most of the last year, in any case.
In short, relative to February 2020, the US labor market still has a very long way to go, but to see any positive trends emerge is a good thing considering we’re still in the middle of a winter that many expected to have been significantly worse than it has been, thus far at least.
In the report for December 2020, the immediate question going forward was how soon we could expect to start seeing positive job growth again. The answer to that question came quickly with January netting 49k new non-farm jobs.
Not all sectors were equally fortunate in terms of their distribution of those job gains, of course.
Perhaps most surprisingly, there was a net loss in health care jobs last month despite both a pandemic at near peak levels and an increasingly robust vaccine rollout. This sector is down over half a million jobs since the pandemic struck and lost 30k jobs overall last month with the biggest losses occurring in nursing care facilities at -19k jobs, home health care services at 13k jobs, and community care services for the elderly at -7k jobs last month.
The hardest hit industry remains leisure and hospitality, which is down by 3.9 million (almost 23%) since February 2019. Last month alone saw this sector shed another 61k jobs, but relative to the 536k jobs lost in leisure and hospitality just one month earlier it’s still a step in the right direction. That’s an almost 90% improvement in sector job loss from one month to the next, which is an encouraging metric for an industry in need of encouragement.
Another sector that experienced a net reduction in jobs last month is retail, which lost 38k jobs and is down 383k since last February. General merchandise stores (-38k) and electronics and appliance stores (-29k) are also down. Meanwhile, clothing and clothing accessory stores added 15k jobs last month, food and beverage stores added 15k jobs, and health and personal care stores brought 14k new employees on board. Do these data points perhaps reflect a temporary, pandemic-related adjustment in shopping practices or is there a more fundamental shift in consumer behavior occurring?
The industry with the greatest number of jobs added last month was professional and business services at 97k, but most of that growth was made up of temporary hires (81k).
The unemployment rate fell by nearly half a point from 6.7% to 6.3% last month bringing the total number of unemployed workers to 10.1 million, which is still almost 4.5 million more than the unemployment figures of February of 2020 when the rate was at 3.7%.
Temporary layoffs are down from over 3 million after a small spike in December 2020 to about 2.7 million through January 2021, though those numbers are still larger than they were pre-pandemic by about 2 million.
Another positive sign was that the number of individuals who have been jobless less than 5 weeks decreased to about 2.7 million after having grown to almost 3 million in the month prior.
Beyond those changes and some relative improvements among various worker groups over the month, most of the data in the Household survey shows very little change from December 2020 through January 2021.
In sum, while there is still much ground to recover before the employment figures return to their pre-pandemic levels, relative stability coupled with some relatively modest gains is certainly far from the worst possible outcome that could have reasonably been expected given the circumstances.
What remains to be seen is will that stability last through the winter, will optimism spurred on by the vaccine rollouts and shifting consumer confidence lead to job growth into the spring, or will other potentially negative factors like mutating virus strains become another obstacle impeding continuing economic recovery. Only time will tell.