US employers add just 49K jobs as unemployment falls to 6.3%

WASHINGTON (AP) — America's employers barely added jobs last month, underscoring the viral pandemic's ongoing grip on the economy and likely adding momentum to the Biden administration's push for a bold rescue aid package.

The increase of just 49,000 positions in January made scarcely any dent in the nearly 10 million jobs that remain lost since the virus intensified nearly a year ago. The tepid increase followed a decline of 227,000 jobs in December, the first loss since April.

The unemployment rate fell sharply in January from 6.7% to 6.3%, the Labor Department said Friday. Most of the drop in unemployment occurred because some people out of work found jobs, but others stopped looking for work and were no longer counted as unemployed.

Even last month's small job gain benefited from a technical adjustment to the government's data. And without an increase of 80,000 temporary jobs, the economy would have posted a net loss for January.

“What you have is a lousy report that shows a stalling recovery,” said Nela Richardson, chief economist at the payroll processor ADP.

Soaring new virus infections in late fall had forced tighter business restrictions in California, New York, Virginia and other states, thereby reducing the need for workers. Consumers have also been less willing to dine out, travel or go to concert halls and other venues as the pandemic has persisted. Some business closures, notably in California, have since been eased or lifted, but in many cases too late to affect last month's jobs data.

President Joe Biden on Friday pointed to the discouraging jobs report as evidence that much more government aid for the economy is needed, and he said he would continue to push his $1.9 trillion plan through Congress — if necessary, without Republican support. The proposal includes $160 billion to support vaccination efforts.

“There’s simply nothing more important than getting the resources we need to vaccinate people as soon and as quickly as possible," Biden said, echoing economists who have long argued that controlling the pandemic was a prerequisite for any sustained revival of the economy.

Biden's proposal would also provide $1,400 checks for most U.S. individuals and a $400 weekly unemployment payment on top of state benefits. The package would also extend two federal jobless aid programs, from mid-March through September.

Economists are increasingly hopeful that as vaccinations reach a critical mass in the coming months and the government provides further stimulus, the economy and job market will strengthen much faster than after previous recessions. Bank of America estimates that growth could reach 6% this year, which would be the fastest since 1984.

“The tunnel we’re in does have a light," Richardson said. "It’s later this year when the U.S. economy is reopened, and after widespread inoculation and maybe stimulus. This is not the end of the story by any means. But it does show the recovery could use more support.”

Gregory Daco, chief U.S. economist at Oxford Economics, forecasts that 6.6 million jobs could be regained by the end of this year, though that would still leave the U.S. economy several million short of its pre-pandemic level.

Still, more than 4 million Americans have lost jobs and stopped looking for work since the pandemic began. Including those individuals would raise the unemployment rate to 9%, Daco calculates.

Last month, service industries that deal with customers in person again posted the sharpest job losses as millions of consumers continue to hunker down at home. Within the service sector, restaurants, bars and hotels slashed 61,000 jobs. Retailers cut nearly 38,000 jobs. Employment in transportation and warehousing fell by 28,000.

Jobs in education jumped by nearly 120,000, including state and local schools as well as private education and colleges and universities. That increase, though, was likely exaggerated by seasonal adjustments that seek to strip out short-term changes, such as extra hiring around the holiday shopping season. Those seasonal adjustments have been distorted by the huge job losses earlier this year stemming from the virus.

“It’s hard to imagine that (those gains) are sustainable if we don’t reopen the schools,” said Drew Matus, chief market strategist at MetLife Investment Management.

Women continue to be hurt disproportionately by the economic damage from the pandemic, which has led some of them to quit jobs to care for children or eliminated the jobs that many held in the hospitality industry. The proportion of women who either have a job or are looking for one declined in January, By contrast, the proportion for men remained flat.

Amy Cooper of Burlington, North Carolina, is among those struggling to find a job amid the pandemic, which has made her nervous about working in restaurants, where she's worked before. Last spring, she quit a job at a deli because of a difficult pregnancy with her fifth child.

After giving birth, she found a six-month contract job to do political polling from home. That ended in December. She and her husband, who is working at a factory, are fighting an eviction that may occur once a federal moratorium ends in March. She'd like to move to a new home but there aren't many available.

Cooper hopes to be able to work from home but is willing to take anything at this point. She's had two interviews during her job hunt but no offers.

“There's nowhere to move,” said Cooper, 32. “There's no jobs and no houses.”

Some hopeful signs have emerged recently to suggest that the economy might be picking up a bit. Auto sales rose solidly in January. And a gauge of business growth in the service sector picked up to its highest level in two years. It also showed that services firms added workers last month. A separate measure of manufacturing indicated that factories are also expanding. So is spending on home construction, as sales of existing homes actually soared last year to the highest level in 14 years.

And some small businesses have been able to expand even amid the pandemic. Allison Flinn, for example, has seen demand for her home organization business in Raleigh, North Carolina, jump during the downturn. She added a new worker to bring her staff to six.

Flinn's company has benefited from people working or attending school online who want to declutter. There has also been a surge of families moving into the area who hire her company to help them unpack and organize. The pandemic has spurred many Americans to seek cheaper or larger living spaces.

Last month, Flinn, 41, hired someone who had been laid off by a hotel.

“Everyone is home all the time, and they can no longer avoid all the stuff that has accumulated," she said. “We are busier than ever."