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Experts shocked: America adds whopping 467,000 positions in January

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Experts and pundits were were shocked by January’s unexpected big job which “blew expectations out of the water.” CNN:

America’s jobs recovery got an unexpected boost in January despite the Omicron variant spreading rapidly throughout the country.

The economy added 467,000 jobs last month, the Bureau of Labor Statistics said Friday, significantly better than most economists had expected.

Restaurants and bars added more than 100,000 jobs. Positions in retail, logistics and business services jobs also increased.
This was a shock, as the consensus forecast had been for only 150,000 jobs. Plenty of experts even expected job losses.
So once again, economists got it totally wrong. It’s a reminder that there are a lot of moving parts in the pandemic economy, making it hard for economic models to keep up with a situation that’s so in flux.

The report blew expectations out of the water.

“The January employment report topped expectations in nearly every way possible. The labor market’s recovery easily leapt over the hurdle thrown up by the Omicron wave in January,” said Wells Fargo economists Sarah House and Michael Pugliese in a note to clients.

Before the report economists had predicted a smaller gain or even a drop, warning that business closures and worker absenteeism in jobs without sick leave could lead to people being counted as unemployed. A similar dynamic played out last winter, when rising infections temporarily weighed on the jobs recovery in December 2020.

This time around, however, seasonal factors actually helped the January numbers.

“The economy usually sheds upwards of 2.5 million jobs in January as the seasonal bump in retail and transportation employment subsides. But pre-Covid seasonal patterns no longer seem to hold,” said Julia Pollak, chief economist at ZipRecruiter.

On top of that, “with many businesses already understaffed, employers let go fewer workers than usual,” House and Pugliese added.
That’s likely in large part because America is still in midst of a labor shortage. As of December, the nation had 10.9 million open jobs.

Still, the Omicron variant did leave its mark on American workers last month. The number of people working remotely because of the virus increased to 15.4%, for example. A total of 6 million people said they worked fewer hours or not at all because of their employer closing or losing business because of the pandemic. The number of people jobless for less than five weeks also increased.

The average number of hours worked also declined, “showing that the impact of the pandemic is still here as more workers had to cut hours due to illness, quarantine, or family obligations,” said Glassdoor Senior Economist Daniel Zhao.

USA Today:

U.S. employers unexpectedly added a booming 467,000 jobs in January even as COVID’s omicron variant kept millions of Americans out of work.

The unemployment rate, which is calculated from a different survey of households, rose from 3.9% to 4%, the Labor Department said Friday.

Unemployment, however, rose for an encouraging reason. About 1.4 million Americans streamed into a favorable labor market. The share of adults working or looking for jobs increased sharply from 61.9% to 62.2%, though that’s still well below the pre-COVID mark of 63.4%.

Economists surveyed by Bloomberg had estimated a modest 150,000 jobs were added last month but many projected an outright decline.

Even more encouraging: Job gains for November and December were revised up by a whopping 709,000, more than doubling what were weak average monthly advances of 224,000 during that period to 578,000. The upgrade reveals an economy and labor market that were much more resilient than believed toward the end of 2021 as omicron emerged.

Graphic via Dreamstime,