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Friday, February 04, 2022

Comments on January Employment Report

by Calculated Risk on 2/04/2022 09:32:00 AM

This was a strong report, and the revisions show job growth was stronger - and steadier - over the last year than originally reported.

The headline jobs number in the January employment report was well above expectations, and employment for the previous two months was revised up by 709,000.   The participation rate and the employment-population ratio both increased, however the unemployment rate increased to 4.0%.

Leisure and hospitality gained 151 thousand jobs in January.  In March and April of 2020, leisure and hospitality lost 8.20 million jobs, and are now down 1.75 million jobs since February 2020.  So, leisure and hospitality has now added back about 79% all of the jobs lost in March and April 2020.

Construction employment decreased 5 thousand and is now 101 thousand below the pre-pandemic level. 

Manufacturing added 13 thousand jobs and is still 226 thousand below the pre-pandemic level.

Earlier: January Employment Report: 467 thousand Jobs, 4.0% Unemployment Rate

In January, the year-over-year employment change was 6.61 million jobs.

Permanent Job Losers

Year-over-year change employmentClick on graph for larger image.

This graph shows permanent job losers as a percent of the pre-recession peak in employment through the report today. (ht Joe Weisenthal at Bloomberg).

This data is only available back to 1994, so there is only data for three recessions.

In January, the number of permanent job losers decreased to 1.630 million from 1.703 million in November.

These jobs will likely be the hardest to recover, so it is a positive that the number of permanent job losers is declining fairly rapidly.

Prime (25 to 54 Years Old) Participation

Employment Population Ratio, 25 to 54Since the overall participation rate has declined due to cyclical (recession) and demographic (aging population, younger people staying in school) reasons, here is the employment-population ratio for the key working age group: 25 to 54 years old.

The prime working age will be key as the economy recovers.

The 25 to 54 participation rate increased in January to 82.0% from 81.9% in December, and the 25 to 54 employment population ratio increased to 79.1% from 79.0% the previous month.

Both are still below the pre-pandemic levels and indicate that some prime workers have still not returned to the labor force.

Part Time for Economic Reasons

Part Time WorkersFrom the BLS report:
"The number of persons employed part time for economic reasons, at 3.7 million, continued to trend down over the month. The over-the-year decline of 2.2 million brings this measure to 673,000 below its February 2020 level. These individuals, who would have preferred full-time employment, were working part time because their hours had been reduced or they were unable to find full-time jobs."
The number of persons working part time for economic reasons decreased in January to 3.717 million from 3.929 million in December. This is lower than pre-recession levels.

These workers are included in the alternate measure of labor underutilization (U-6) that decreased to 7.1% from 7.3% in the previous month. This is down from the record high in April 22.9% for this measure since 1994. This measure was at 7.0% in February 2020 (pre-pandemic).

Unemployed over 26 Weeks

Unemployed Over 26 WeeksThis graph shows the number of workers unemployed for 27 weeks or more.

According to the BLS, there are 1.691 million workers who have been unemployed for more than 26 weeks and still want a job, down from 2.008 million the previous month.

This does not include all the people that left the labor force. 


The headline monthly jobs number was well above expectations; and the previous two months were revised up by 709,000 combined.  With the revisions - including the benchmark revision - job growth was stronger and steadier over the last year than originally reported.  

The headline unemployment rate increased to 4.0% as the participation rate increased.  The household survey indicated a large gain in employment of 1.01 million.

The prime age participation rate and employment-population ratio, are still below pre-pandemic levels, indicating some prime workers are still out of the labor force.   And there are still 2.9 million fewer jobs than prior to the recession.  

Overall, this was a very strong report - and surprising given the surge in COVID cases in January.