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U.S. Jobs: 2022 Begins with a Series of Fortunate Events

It's up, pup, and away for the U.S. economy as 2022 begins with a surprisingly strong January employment report. Not only that, but previous dismal figures from November and December got a fat boost.

The U.S. employment outlook is coming up roses.Given that the United States set new records for daily infection rates and attendant stats in January, the jobs report had been a source of concern — if not outright worry — for many. This morning, however, the U.S. Bureau of Labor Statistics reported a gain of 467,000 jobs for January.

 

Not only that, but preceding months got a big boost as well. November jumped up from 249,000 to 647,000, and December sprang heavenward from 199,000 to 510,000. That's a net gain, across those two months, of 709,000 jobs. Incorporating the January 467,000 number produces a respectable monthly average for that period of 541,000 jobs.

 

That’s just a bit lower than the monthly average for all of 2021, which comes to 555,000 jobs per month. In fact, reporting by The Washington Post described overall 2021 job numbers as “one of the best years for the labor market in U.S. history.”

 

All in all, it comes as a bit of indisputably good news. That said, it has to be understood in the context of digging out of the hole that the March 2020 pandemic crash created in the labor force. According to the latest Employment Situation Summary, employment levels are still down by 1.2 million jobs from February 2020 levels, and unemployment is still 0.5 percent higher than it was then (4.0 percent now versus 3.5 percent at the end of February 2020).

 

My take: We’re not quite out of the hole yet, but we can see what’s outside as the surrounding landscape comes into view. It has been a dizzying climb, but it’s not finished yet.

 

What the Latest Report Reveals

 

The biggest job gains for January came in a good number of sectors. Here are some details:

 

Leisure and hospitality (Omicron surge notwithstanding) added 151,000 jobs in January, with most of them in food services and drinking places (108,000) and accommodation (23,000). But this sector is still down more than 10 percent relative to February 2020 levels. And because numbers reported at the end of the month are gathered at the start of its second week, it’s pretty likely that this sector will show a dip in the next report, thanks to the Omicron surge.

 

The U.S. employment outlook is coming up roses.Professional and business services added 86,000 jobs, spread across multiple sub-sectors. Management and technical consulting services added 16,000 jobs; computer systems design and related services bagged 15,000 jobs; architectural and engineering services brought in 8,000 jobs; and professional and technical services added 7,000 jobs. This sector has actually GAINED 511,000 jobs vis-à-vis February 2020, and is one of the few labor market areas where growth has occurred since then.

 

Retail trade added 61,000 jobs, again across numerous sub-sectors. General merchandise stores added 29,000; health and personal care stores brought in 11,000; sporting goods, hobby, book and music stores bagged 7,000; and building material and garden supply outlets jumped up 6,000. This sector, too, is an overall gainer since February 2020, but only by a much more modest 61,000 jobs. And this sector, too, may get nicked by the recent Omicron surge when next month’s results become known.

 

Transportation and warehousing grew by 54,000 in January, and also shows widespread distribution across subsectors. In this case, couriers and messengers added 21,000; warehousing and storage bagged 13,000; truck transportation jumped up 8,000; and air transportation grew by 7,000. These sectors, too, are ahead of February 2022 levels, with warehousing and storage up by 410,000, and couriers and messengers up by 236,000 since then.

 

Local government education added 29,000 jobs, but it remains down by 359,000 (4.4 percent) relative to February 2020.

 

Healthcare added 18,000 jobs, and remains down by 378,000 (2.3 percent) since February 2020.

 

Wholesale trade added 16,000 jobs, with 11,000 in durable goods, and 8,000 in nondurable goods. Here too, employment is up a bit vis-à-vis February 2020: 125,000 (2.1 percent).

 

Other sectors remained relatively flat in January, including mining, construction, manufacturing, information, financial activities and other services. Nevertheless, things are definitely still trending up. It’s also nice to see that three sectors (professional and business services, retail trade, and transportation and warehousing) are actually ahead of their February 2020 levels.

 

Average hourly earnings are up by 23 cents in January to $31.63. Over the preceding 12-month period, earnings are up by 5.7 percent. Too bad, is it not, that the current inflation rate is right at 7 percent? Alas, this means that, despite their earnings gains, workers are losing ground against the rising tide of inflation. This now looms as a major challenge to consumer confidence and prosperity.

 

The U.S. employment outlook is coming up roses.I hope the Fed’s planned sequence of interest rate hikes can help stem this tide, along with the administration’s efforts to improve the performance of our supply chains. Economists do take heart from today’s job report, though, because January hiring and the revised November/December numbers seem to show that a restricted labor supply isn’t necessarily of the factors contributing to inflation. That’s a relief, anyway.

 

Where to Next?

 

The real impact of the Omicron surge will show up in the February jobs report due out on March 4. I suspect it will see dips in sectors that involve face-to-face contact — namely, leisure and hospitality, retail trade, education, healthcare, and construction.

 

But I also find myself much more optimistic about prospects for growth and improvement in 2022 than I had been before the higher-than-expected January jobs numbers showed up. Ditto for the unexpected boost of 709,000 to the previously anemic November and December numbers. Here’s hoping that we can continue on a healthy upward trajectory.

 

ABOUT THE AUTHOR

Ed TittelEd Tittel is a 30-plus-year computer industry veteran who's worked as a software developer, technical marketer, consultant, author, and researcher. Author of many books and articles, Ed also writes on certification topics for Business News Daily, and on Windows desktop OS topics for TechTarget and Win10.Guru. Check out his website at www.edtittel.com.