US employers add just 49,000 jobs as unemployment rate falls to 6.3%

US employers add just 49,000 jobs as unemployment rate falls to 6.3%

U.S. employers added just 49,000 jobs in January, a sign that that the viral pandemic retains a tight grip on the economy nearly a year after it triggered a painful recession.

The tepid increase followed a decline of 227,000 jobs in December, the first loss since April. The unemployment rate for January fell sharply from 6.7% to 6.3%, the Labor Department said Friday. About half the drop occurred because some of those out of work found jobs, while others stopped looking for work and were no longer counted as unemployed.The figures reflect a faltering job market, slowed by a viral pandemic that is still causing consumers to avoid traveling, shopping, dining out, attending entertainment venues and engaging in other forms of face-to-face contact. Nearly 10 million Americans remain unemployed.

Some states and localities re-imposed restrictions on businesses in December as cases spiked. Some of those restrictions were loosened in January, though perhaps not in time to affect the jobs report, which measures employment in the middle of each month.

As hiring has slowed, many employers have continued to lay off workers. The number of applications for unemployment benefits, though declining for the past few weeks, remained at an elevated 779,000 last week.

THIS IS A BREAKING NEWS UPDATE. AP’s earlier story is below:

The U.S. jobs report for January being released Friday is expected to show a slight rebound after six straight months of weaker hiring. But any gain might have resulted mainly from a technical adjustment and would make little dent in the vast unemployment caused by the pandemic recession.

Economists have forecast that employers added 100,000 jobs last month, according to data provider FactSet. That would mark a welcome reversal from a loss in December — the first since April — of 140,000. Still, a gain of that modest size is practically negligible when the economy is nearly 10 million jobs short of its pre-pandemic level.

The unemployment rate is projected to remain stuck at 6.7% for a third straight month, almost twice its pre-pandemic level.

The tepid employment figures reflect a weak job market, slowed by a still-widespread viral pandemic that is causing consumers to avoid traveling, shopping, dining out, attending entertainment venues and engaging in other forms of face-to-face contact. At the same time, many states and localities re-imposed restrictions on businesses as cases spiked in December. Some of those restrictions were loosened last month, though not necessarily in time to affect the jobs report, which measures employment in the middle of each month.

As hiring has slowed, many employers have continued to lay off workers. The number of applications for unemployment benefits, though declining for the past few weeks, remained at an elevated 779,000 last week.

Those trends are fueling President Joe Biden’s push for a $1.9 trillion stimulus package, which would provide $1,400 checks for most U.S. individuals and a $400 weekly unemployment payment on top of state benefits. It would also extend two federal jobless aid programs, from mid-March through September.

The reason why a gain in the January jobs report might be viewed skeptically is that it would likely be exaggerated by the government’s seasonal adjustment process. The government uses seasonal adjustments to try to filter out the impact of short-term changes that don’t reflect underlying economic trends.

One example involves the annual layoffs of temporary retail employees who were hired for the holiday shopping season. Retail stores, along with restaurants, bars and hotels, typically hire extra staff for the holiday season and then let them go in January. The government’s seasonal adjustments factor in this annual pattern to avoid showing a huge job gain before the holiday season and then a huge loss afterward.

This year, though, holiday hiring was likely much weaker because of the pandemic. As a result, layoffs in January probably weren’t as large as they typically are. As a result, the seasonal adjustment process might have exaggerated any hiring gain last month.

January is also the month when the Labor Department incorporates new Census estimates of the U.S. population. That could cause fluctuations in the unemployment rate.

“It’s going to be a wild month,” said Gregory Daco, chief U.S. economist at Oxford Economics.

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