US economy defies omicron and creates 467,000 jobs in January – Twin Cities

In a surprising burst of hiring, US employers added 467,000 jobs last month, a sign of the economy’s resilience in the face of a wave of omicron infections.

The government report on Friday also revised up its estimate of job gains for November and December by a total of 709,000. He also said that the unemployment rate fell from 3.9% to 4%, still low, mainly because more people started looking for work and not all found jobs right away.

Strong hiring growth in January, which defied expectations of only a slight gain, demonstrated the eagerness of many employers to hire even as the pandemic raged. Companies seem to have viewed the omicron wave as having, at most, a temporary impact on the economy and remain confident about their longer-term prospects.

“Employers assumed omicron would be a pain but in the short term, so they didn’t change their hiring plans,” said Mathieu Stevenson, CEO of Snagajob, a worker-focused job board. schedule. “The demand from employers is stronger than ever.”

January’s hiring gain and sharp upward revisions from previous months mean the US has 1.1 million more jobs than government data showed just a month ago . Strong hiring, along with steady wage gains, is boosting consumer spending, which has come up against tight supply chains to accelerate inflation to its highest level in four decades.

Adjusted for price increases, Americans’ paychecks on average aren’t going as far as they did a year ago, even though many workers have received raises. Many households, especially low-income families, struggle to afford basic necessities like gas, food, rent and child care.

These trends will give the Federal Reserve more leeway to raise interest rates, perhaps even faster than it had expected, in order to calm inflation. The Fed has indicated that it will start raising rates in March and may do so again at its next meeting in May. Faster rate hikes could reduce borrowing and spending and potentially weaken the economy.

Stocks initially fell on expectation that the Fed will tighten credit more quickly, before stock prices rallied in the early afternoon. But the 10-year Treasury yield jumped nearly a tenth of a percentage point to 1.91%, a sign that investors are anticipating higher borrowing costs.

Across the economy, most industries hired workers last month, including retailers, which added more than 61,000 jobs, and restaurants and hotels, which gained 131,000. shipping and warehousing added 54,000. Many companies in those industries likely retained some of the workers they hired during the winter break, economists said, rather than laying them all off.

Omicron left its fingerprints on the report: The percentage of Americans working from home rose to more than 15% from 11% in December. And the number of sick people last month rose to 3.6 million, from less than 2 million the previous January and about triple the pre-pandemic level. This has forced many businesses, from restaurants to retailers to manufacturers, to cut hours or even close due to staff shortages.

Among the workers who were sick was Perla Hernandez, whose entire family of eight contracted COVID last month. Hernandez, her husband and 20-year-old daughter all missed work, a blow to the family’s finances.

Hernandez, 42, who lives in the San Jose, Calif., area, missed six days of her job as a cook and janitor at Burger King. Because she has no paid sick leave, the paycheck she receives every two weeks is just $230.

About a fifth of American workers receive no sick pay, and the proportion is much higher among the lowest-paid service workers. Only 33% of workers in the bottom 10% of the pay scale receive paid sick leave, compared to 95% of employees in the top 10%.

“Thank God we had already paid the January rent,” she said through an interpreter. “We had to go to a food bank.

Hernandez said she was making $15.45 an hour, after receiving a 45-cent raise six months ago. But she and her colleagues, including managers, worked particularly long hours as the restaurant struggled to hire.

Daniel Zhao, senior economist at jobs website Glassdoor, said the strong hiring – not just for January but also for November and December – is a sign that last month’s gains weren’t just a blow. .

“It’s a real trend, and job growth has been faster than we thought,” Zhao said.

A greater proportion of Americans are now also working or looking for work, the report showed, a trend that is making it easier for businesses to find workers. This suggests that concerns about long-term labor shortages may have been exaggerated, at least in some industries.

“There are workers there – it just takes time to get them back into the workforce,” Zhao said.

Grady Cope, CEO of Reata Engineering and Machine Works, said nine of his 43 employees were sick last month – the most he can remember in nearly 30 years at the helm of the company.

But Cope’s company, which makes parts for aircraft and medical device makers, also has the biggest order book it’s ever had. He wants to add at least eight employees, including machinists, assemblers and engineers. Last month, he raised his salary by 18%, much more than the usual increases of 3% to 4%. His company is based near Denver, where rent and other costs are rising rapidly.

“People need to have a salary to be able to support themselves and raise a family,” he said.

Yet Cope raised his own prices to compensate for the higher wages of his workers. The competition for workers, he said, is the toughest he has ever seen. In October, four of its workers resigned. Only one gave notice.

“This has never happened in 28 years,” he said.

The overall labor market outlook remains bright, with job openings nearing a record high, the pace of layoffs declining and the unemployment rate already at a healthy level. The country gained more jobs last year, adjusted for the size of the workforce, than any year since 1978. Much of that improvement represented a rebound from losses record jobs in 2020 that have been driven by the pandemic recession.