US added far more jobs than expected in January, defying Omicron

Non-farm payrolls increased 467,000 in January after an upwardly revised 510,000 gain in December. PHOTO: AFP

WASHINGTON (BLOOMBERG, AFP) - US employers added far more jobs than forecast last month, weathering record-high levels of Covid-19 infections and the resulting absenteeism from work.

Non-farm payrolls increased 467,000 in January after an upwardly revised 510,000 gain in December, a Labour Department report showed on Friday (Feb 4). The unemployment rate ticked up to 4 per cent, and average hourly earnings jumped.

The median estimate in a Bloomberg survey of economists called for a 125,000 advance in payrolls, though forecasts ranged widely. A variety of factors including Omicron and the way workers who are home sick are factored in make interpreting the January data challenging.

The labour market resilience could alter expectations that US economic growth would slow significantly in the first quarter after robust growth in the fourth quarter.

Economists had been bracing themselves for a disappointment as the government surveyed businesses for payrolls in mid-January, when Omicron infections were peaking.

The data further reinforces Federal Reserve chair Jerome Powell's description last week of the labour market as "strong" and validate the central bank's intention to raise interest rates in March to combat the highest inflation in nearly 40 years.

The jobs report showed average hourly earnings rose 0.7 per cent in January and 5.7 per cent from a year ago, further fanning concerns about the persistence of inflation. The average workweek dropped.

The faster-than-expected advance in pay could fuel market concerns about the Fed taking an even more aggressive stance on inflation this year.

Overall, 3.6 million employed Americans were not at work due to illness in January, more than double that in December.

The job gains were broad based, led by a 151,000 advance in leisure and hospitality. Transportation and warehousing, retail trade and professional and business services also posted solid increases.

The solid employment growth in several categories may reflect businesses choosing to retain more holiday workers than normal in the face of a tight labour market.

Overall, the economy had added 19.1 million jobs since the nadir of the Covid-19 crisis in April 2020, but it is still short 2.9 million positions, the data said.

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