US payrolls rise less than forecast after bigger December drop

WASHINGTON (BLOOMBERG, AFP) – The recovery in the US labour market disappointed for a second month in January with only modest job growth that highlights persistently difficult prospects for millions of unemployed and bolsters calls for more stimulus.

Non-farm payrolls increased by 49,000 from the prior month after a downward revision of a 227,000 decrease in December, while the unemployment rate fell to 6.3 per cent, according to a Labour Department report on Friday (Feb 5).

The labour force participation rate declined as more people left the workforce.

The median estimates in a Bloomberg survey of economists called for a 105,000 gain in payrolls and an unemployment rate of 6.7 per cent.

Payroll estimates ranged from a 250,000 monthly decline to a 400,000 increase.

Ten-year Treasury yields slid after the report to trade at about 1.155 per cent- from about 1.17 per cent just before.

Stock futures maintained gains on expectations of additional fiscal stimulus. The January data may elicit more urgent calls for another pandemic relief package.

President Joe Biden has proposed a US$1.9 trillion (S$2.54 trillion) package, but many Republicans prefer to hold off on more assistance and wait for the December US$900 billion aid package to filter through the economy.

The weaker-than-expected report reflected job cuts in retail trade, transportation and warehousing, and leisure and hospitality, while other industries saw only modest gains.

The latest figures underscore a labour market that continues to struggle even as other parts of the economy have rebounded.

Restrictions on activity and businesses have eased, but fears of more contagious virus variants may curb consumer activity.

Pandemic-sensitive sectors like leisure and hospitality will likely remain depressed until widespread vaccinations allow for robust spending on services.

The jobs report also included the Bureau of Labour Statistics’ annual benchmark revision, which aligns establishment data with state unemployment insurance tax records. The revisions impact payrolls, hours and earnings data.

Leisure and hospitality payrolls fell 61,000 in January, after a 536,000 drop in December.

Health care and social assistance fell 40,800 while retail trade declined by 37,800 in January.

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Average hourly earnings rose 0.2 per cent from the prior month and increased 5.4 per cent from a year earlier. These figures have been challenging to interpret during the pandemic given the scale and distribution of job losses and gains.

Average weekly hours rose to 35 from 34.7.

Mr William Spriggs, chief economist of the AFL-CIO trade union federation, pointed to the slight increase in the number of people who are long-term unemployed to just over four million, or 39.5 per cent of all unemployed people.

“These show it will be very hard to get the unemployment number down. We need help now to slow that growth,” he tweeted.

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