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Economy shows resilience in face of omicron, adding 467,000 jobs

The labor market shattered expectations last month in a strong start to the year.

(CN) — American employers added 467,000 jobs in January, a sign the U.S. economy held steady during a surge in coronavirus infections driven by the highly contagious omicron variant.

Economists predicted anywhere between a modest gain of around 150,000 jobs last month to a net loss, but a Labor Department report released Friday morning showed robust growth. The unemployment rate stayed about the same at 4%.  

Nick Bunker, economic research director at Indeed Hiring Lab, called the latest jobs report a pleasant surprise.

“The feared disruption of the labor market from the omicron variant was not as bad as expected in January,” he wrote. “While progress is still needed, 2022 is off to a good start.”

The leisure and hospitality industry, which has been hit hardest by the pandemic, led the way in hiring in January, adding 151,000 jobs. Food service and drink establishments accounted for 108,000 of those jobs, while the accommodation sector gained 23,000. Leisure and hospitality as a whole is still down 1.8 million jobs compared to its pre-pandemic level in February 2020.  

Professional and business services added 86,000 positions last month, while notable gains were also seen in retail (61,000), transportation and warehousing (54,000), health care (18,000) and wholesale trade (16,000). Job growth stayed largely flat for other industries like mining, construction and manufacturing.

The public sector added 23,000 jobs, as a gain of 33,000 in local government, including 29,400 in education, was offset by an overall drop of 10,000 at the federal and state government levels.  

Bunker predicted the solid payroll growth will continue in the coming months.  

“As we have seen in the past, the economic fallout from each successive wave of the pandemic has been smaller and smaller,” he said. “This trend, along with strong demand for workers suggests 2022 could be a year with continued strong gains for the labor market.”

In addition to the hiring surge in January, Friday’s report shows growth in 2021 was better than originally thought. Jobs gains for the final two months of the year were revised up by more than 700,000 combined, including a change from 199,000 to 510,000 in December.

“The average monthly payroll gain last year was over a half million, so while things might have appeared volatile at the time, employment was actually growing strongly over the year,” Bunker said.

U.S. Labor Secretary Marty Walsh noted the economy is averaging 541,000 new jobs a month over the last three months.

“The Biden-Harris administration’s historic, worker-centered recovery continued despite the impact of the omicron variant, a testament to policies that have provided workers and employers with the tools they need to increase resilience across our economy,” Walsh said in a statement. “With labor force participation up over the year and long-term unemployment continuing to decline, America is getting back to work.”

Though the better-than-expected jobs report is welcome news to the Biden administration, inflation remains a primary economic concern. Prices are up 7% over the last year, the biggest jump since 1982.

According to the monthly index by the University of Michigan, Americans are the most pessimistic about the economy they’ve been since late 2011, with the university’s consumer sentiment index falling 3.4 points to 67.2. The survey has shown a steady decline in consumer sentiment the last few months.

The Federal Reserve is signaling a hike in interest rates next month to counter the elevated inflation. “With inflation well above 2% and a strong labor market, the committee expects it will soon be appropriate to raise the target range for the federal funds rate,” the central bank said last week.

Touting the recent streak of strong job creation, President Joe Biden took a victory lap at the White House on Friday morning.

“Our country has taken everything that Covid has thrown at us and we’ve come back stronger,” he said. “I’m pleased to report this morning…that America’s job machine is growing stronger than ever, fueling a strong recovery and opportunity for hard-working women and men all across this great country.”

The president also tried to alleviate inflation concerns.

“Average people are getting clobbered by the cost of everything today,” Biden said. “Gas prices at the pump are up, we’re working to bring them down, but they’re up. Food prices are up, we’re working to bring them down as well.”

He added, “We’re going to keep strengthening the supply chain to bring down the cost of all these goods.”

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