The Bureau of Labor Statistics (BLS) released the employment situation for January 2022, showing that payroll employment increased by 467,000 jobs in January and that the unemployment rate remained nearly constant at 4.0 percent. This strong growth in jobs occurred despite the survey being conducted at the peak of the spike in Omicron cases during the week of January 10-14.
Perhaps the most interesting feature of this report is that it contained a revision to the data for seasonal adjustment patterns. These updates perhaps provide a clearer picture of how the economy evolved through 2021. While the overall gains in 2021 were revised up slightly by 217,000 jobs, they revised job gains down by 807,000 during June and July and up by 709,000 over November and December. These revised data now show that the US added 647,000 jobs in November and 510,000 new jobs in December, which hints at a much stronger labor market than in the original reports. With the new January data, the US economy has added more than 541,000 jobs per month over the last three months.
In January, employment gains were concentrated in service sectors including Leisure and Hospitality which was the hardest hit by the pandemic, and Retail Trade and Transportation and Warehousing that are increasing employment to reduce supply chain issues. Professional and Business Services also continued to see strong employment growth.
In another sign of strength, nearly 1.4 million workers entered the labor force in January, increasing the labor force participation rate from 61.9 to 62.2 percent. This large increase is a positive sign that the labor force participation rate may be starting to return to pre-pandemic levels as shown in Figure 1. This large return of workers to the labor market should help firms find workers for many of their near-record number of open jobs. This strong job growth over the last quarter adds to growing evidence of a continued strong economic recovery from the pandemic despite the high levels of COVID cases in December and January.
Finally, the jobs report provides further evidence of robust wage gains for workers. The report shows that average hourly earnings increased by 23 cents in January, making for a gain of 5.7% over the past year. This adds to evidence from the Employment Cost Index for December released by the BLS last week showing that employment costs had risen by 4% in 2021. While workers are seeing substantial wage gains, they will not see real wage growth unless the gains can keep up with inflation which rose by 7% in 2021. As some of the price pressures from supply chain issues ease, workers will hopefully begin to see sustained wage growth.
