January Job Gains Prompt Slight Drop In Unemployment Rate

The unemployment rate fell by 0.4 percentage point to 6.3 percent in January, while nonfarm payroll employment changed little (+49,000), the U.S. Bureau of Labor Statistics reported today. The labor market continued to reflect the impact of the coronavirus (COVID-19) pandemic and efforts to contain it.

In January, notable job gains in professional and business services and in both public and private education were offset by losses in leisure and hospitality, in retail trade, in health care, and in transportation and warehousing.

The change in total nonfarm payroll employment for November was revised down by 72,000, from +336,000 to +264,000, and the change for December was revised down by 87,000, from -140,000 to -227,000.

The establishment survey measures nonfarm employment, hours, and earnings by industry.

Household Survey Data

In January, the unemployment rate fell by 0.4 percentage point to 6.3 percent, and the number of unemployed persons decreased to 10.1 million.

Although both measures are much lower than their April 2020 highs, they remain well above their pre-pandemic levels in February 2020 (3.5 percent and 5.7 million, respectively).

Among the major worker groups, the unemployment rates declined over the month for;

• Adult men (6.0 percent),
• Adult women (6.0 percent),
• Whites (5.7 percent),
• Hispanics (8.6 percent),
• Teenagers (14.8 percent),
• Blacks (9.2 percent) and
• Asians (6.6 percent).

Among the unemployed, the number of persons on temporary layoff decreased in January to 2.7 million. This measure is down considerably from the recent high of 18.0 million in April but is 2.0 million higher than its February level.

The number of permanent job losers, at 3.5 million, changed little in January but is 2.2 million higher than in February.

The number of reentrants to the labor force decreased in January to 2.0 million. Reentrants are persons who previously worked but were not in the labor force prior to beginning their job search.

In January, the number of persons jobless less than 5 weeks decreased to 2.3 million.

The number of long-term unemployed (those jobless for 27 weeks or more), at 4.0 million, was about unchanged in January and accounted for 39.5 percent of the total unemployed.

After accounting for the annual adjustments to the population controls, both the civilian labor force and the number of employed persons changed little in January.

At 61.4 percent, the labor force participation rate was about unchanged over the month but is 1.9 percentage points lower than its February level.

The employment-population ratio, at 57.5 percent in January, changed little over the month but is 3.6 percentage points lower than in February.

The number of persons employed part-time for economic reasons, at 6.0 million, changed little in January. This measure is 1.6 million higher than the February level.

These individuals, who would have preferred full-time employment, were working part-time because their hours had been reduced or they were unable to find full-time jobs.

The number of persons not in the labor force who currently want a job, at 7.0 million, edged down in January but is 1.9 million higher than in February.

These individuals were not counted as unemployed because they were not actively looking for work during the last 4 weeks or were unavailable to take a job.

The number of persons marginally attached to the labor force, at 1.9 million, decreased in January.

These individuals wanted and were available for work and had looked for a job sometime in the prior 12 months but had not looked for work in the 4 weeks preceding the survey.

The number of discouraged workers, a subset of the marginally attached who believed that no jobs were available for them, was little changed over the month at 624,000.

Household Survey Supplemental Data

In January, the share of employed persons who teleworked because of the coronavirus pandemic edged down to 23.2 percent.

These data refer to employed persons who teleworked or worked at home for pay at some point in the last 4 weeks specifically because of the pandemic.

In January, 14.8 million persons reported that they had been unable to work because their employer closed or lost business due to the pandemic–that is, they did not work at all or worked fewer hours at some point in the last 4 weeks due to the pandemic.

This measure is 1.1 million lower than in December. Among those who reported in January that they were unable to work because of pandemic-related closures or lost business, 12.7 percent received at least some pay from their employer for the hours not worked, little changed from the previous month.

Among those not in the labor force in January, 4.7 million persons were prevented from looking for work due to the pandemic; this measure is little changed from December.

To be counted as unemployed, by definition, individuals must be either actively looking for work or on temporary layoff.

These supplemental data come from questions added to the household survey beginning in May 2020 to help gauge the effects of the pandemic on the labor market. This data is not seasonally adjusted.

Establishment Survey Data

Total nonfarm payroll employment changed little in January (+49,000) but is below its February 2020 level by 9.9 million, or 6.5 percent.

In January, notable job gains in professional and business services and in both public and private education were offset by losses in leisure and hospitality, in retail trade, in health care, and in transportation and warehousing.

In January, employment in professional and business services rose by 97,000, with temporary help services accounting for most of the gain (+81,000).

Job growth also occurred in management and technical consulting services (+16,000), computer systems design and related services (+11,000), and scientific research and development services (+10,000).

These gains were partially offset by job losses in services to buildings and dwellings (-14,000) and in advertising and related services (-6,000).

Since February, employment in professional and business services is down by 825,000.

In January, employment increased in local government education (+49,000), state government education (+36,000), and private education (+34,000).

In both public and private education, pandemic-related employment declines in 2020 distorted the normal seasonal buildup and layoff patterns. This likely contributed to the job gains in January (after seasonal adjustment).

Wholesale trade continued to add jobs in January (+14,000). However, employment in the industry is 263,000 below its February level.

In January, employment in mining increased by 9,000, with a gain of 8,000 in support activities for mining. Mining employment is down by 133,000 since a recent peak in January 2019, though employment in the industry showed little change for several months prior to the uptick in January.

In January, employment in leisure and hospitality declined by 61,000, following a steep decline in December (-536,000). In January, employment edged down in amusements, gambling, and recreation (-27,000) and in accommodation (-18,000).

Employment in food services and drinking places continued to trend down (-19,000).

Employment in leisure and hospitality fell by 8.2 million during March and April, increased by 4.9 million from May to November, and then declined by 597,000 over the past 2 months. Since February, employment in leisure and hospitality is down by 3.9 million, or 22.9 percent.

Retail trade lost 38,000 jobs in January, after adding 135,000 jobs in December. Over the month, employment declined in general merchandise stores (-38,000), electronics and appliance stores (-29,000), and nonstore retailers (-15,000).

These job losses were partially offset by gains in food and beverage stores (+15,000), clothing and clothing accessories stores (+15,000), and health and personal care stores (+14,000).

Employment in retail trade is 383,000 lower than in February.

Employment in health care declined by 30,000 in January. Within the industry, job losses occurred in nursing care facilities (-19,000), home health care services (-13,000), and community care facilities for the elderly (-7,000). Since February, health care employment is down by 542,000.

Employment in transportation and warehousing declined by 28,000 in January and is 164,000 lower than in February. In January, job losses occurred in warehousing and storage (-17,000) and in couriers and messengers (-14,000); however, employment in these industries is higher than in February by 97,000 and 137,000, respectively.

Employment in air transportation increased by 15,000 over the month but is 105,000 lower than in February.

Employment in manufacturing changed little over the month (-10,000), following 8 months of growth. Within the industry, durable goods lost 17,000 jobs in January.

Employment in manufacturing is up by 803,000 since April but is 582,000 lower than in February.

Construction employment changed little over the month (-3,000), after increasing for 8 consecutive months. However, employment in the industry is down by 256,000 since February.

In January, employment changed little in other major industries, including information, financial activities, and other services.

In January, average hourly earnings for all employees on private nonfarm payrolls increased by 6 cents to $29.96. Average hourly earnings of private-sector production and nonsupervisory employees, at $25.18, changed little (+3 cents). The large employment fluctuations over the past several months–especially in industries with lower-paid workers–complicate the analysis of recent trends in average hourly earnings.

The average workweek for all employees on private nonfarm payrolls increased by 0.3 hour to 35.0 hours in January. In manufacturing, the workweek also increased by 0.3 hour to 40.4 hours, and overtime was unchanged at 3.2 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls increased by 0.2 hour to 34.4 hours.

Seasonally adjusted data from January 2016 forward are subject to revision. In addition, data for some series prior to 2016, both seasonally adjusted and unadjusted, incorporate other revisions.

The total nonfarm employment level for March 2020 was revised downward by 250,000 (on a not seasonally adjusted basis, -121,000 or -0.1 percent). Not seasonally adjusted, the absolute average benchmark revision over the past 10 years is 0.2 percent.

The over-the-year change in total nonfarm employment for March 2020 was revised from +808,000 to +577,000 (seasonally adjusted).