Business

Employment is faltering as payrolls only rise by 199,000




The U.S. economy added far fewer jobs than expected in December just as the nation struggled with a massive increase in Covid cases, the Labor Department said Friday.

Wage lists outside agriculture grew by 199,000, while unemployment fell to 3.9%, according to data from the Bureau of Labor Statistics. This compares with the Dow Jones estimate of 422,000 for the wage figure and 4.1% for unemployment.

Equity futures moved lower after the report, while bond yields were in positive territory despite the morning highs.

Job creation was highest in leisure and hospitality, an important extraction sector, which added 53,000. Professional services and business services contributed 43,000 while production increased by 26,000.

Unemployment fell to a new low from the pandemic and neared its lowest level in 50 years at 3.5% in February 2020. This decline came even though labor force participation remained unchanged at 61[ads1].9% amid an ongoing labor shortage in the US

A more comprehensive measure of unemployment, which includes discouraged workers and those who have part-time jobs for economic reasons, fell to 7.3%, down 0.4 percentage points.

Average hourly income increased more than expected as the US sees its fastest inflation rate in almost 40 years. Wages rose 0.6% for the month and were up 4.7% from year to year. This compared with the respective estimates of 0.4% and 4.2%.

While the establishment survey showed much lower job gains than expected, household figures told a different story, with a gain of 651,000. There were also adjustments for previous months, with the final October count pushed up to 648,000, an increase of 102,000, while November’s disappointing report received 39,000 in its first revision to 249,000.

The data left the total employment level still 2.9 million back to where it was in February 2020, before the pandemic declaration. Occupational participation is 1.5 percentage points lower, which corresponds to a decrease in the labor force of almost 2.3 million for the period. There were almost 4 million more jobs than there were unemployed workers through November.

Other sectors that see job gains include construction (22,000), transport and warehousing (19,000) and wholesale (14,000).

The numbers come at a crossroads for the US economy as more than half a million Covid cases per day, many related to the omicron variant, threaten to stop an economic recovery that looks set to accelerate in 2022.

While growth slowed over the summer, economists expect GDP to rise sharply at the end of the year, with the Atlanta Fed following 6.7% growth. Federal Reserve officials have been closely monitoring the data.

The central bank has indicated that it will begin to slow down the aid it has provided to the economy since the pandemic began.

Friday’s report covered the week including December 12, which came before the worst of an omicron peak that began on the way to Christmas.

This is breaking news. Please check back here for updates.



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