WASHINGTON, Feb 5 — The US economy created far more jobs than expected in January but despite the disruption to consumer-facing businesses from a surge in Covid-19 cases, pointing to underlying strength that should sustain the expansion as the Federal Reserve starts to raise interest rates.
Nonfarm payrolls increased by 467,000 jobs last month, the survey of establishments showed. Economists polled by Reuters had forecast 150,000 jobs would be added in January. Estimates ranged from a decrease of 400,000 to a gain of 385,000 jobs. Employment is 2.9 million jobs below its pre-pandemic peak.
The labour market resilience could alter expectations that economic growth would slow significantly in the first quarter, after consumer spending exited 2021 with a whimper. The economy grew at a 6.9 per cent annualised rate in the fourth quarter. Growth estimates for the first quarter are below a 2 per cent pace.
Workers who are out sick or in quarantine and do not get paid during the payrolls survey period are counted as unemployed in the establishment survey even if they still have a job. Lower-paid hourly workers in industries like healthcare as well as leisure and hospitality, who typically do not have paid sick leave, bore the brunt of the winter Covid-19 wave.
Employment could increase further as coronavirus infections continue to subside. First-time applications for unemployment benefits dropped for a second straight week last week.