The job market is off to a strong start, according to the first jobs report of 2022. Payroll employment rose by 467,000 jobs in January, beating expectations even as Omicron drove record levels of COVID. The unemployment rate ticked up to 4.0 percent, but labor force participation rose by 0.3 percentage points to 62.2 percent. The upward revisions to payroll growth at the end of 2021 added an additional 709,000 jobs in November and December. Ultimately, this report signals that the job market recovery is plowing forward, despite Omicron headwinds.
Payroll Growth Smashes Expectations
Payrolls rose by 467,000 jobs in January 2022, even with Omicron. Despite millions of Americans reporting being sick, quarantined or caring for family members, payroll growth continued to chug along. November 2021 jobs growth was revised up to 647,000 from 249,000, and December up to 510,000 from 199,000, indicating that the end of 2021 was significantly stronger than originally thought, despite the ongoing Delta wave at that time.
Payroll gains were broad-based, appearing even in COVID-sensitive sectors like leisure & hospitality (+151,000 jobs). Retail (+65,400) and transportation & warehousing (+54,200) also saw significant job gains despite the end of the holiday season, perhaps as employers wary of labor shortages converted more seasonal workers into full-time employees.
Unemployment Ticks up to 4.0 Percent on Strong Labor Force Gains
The unemployment rate ticked up to 4.0 percent in January 2022, as the labor force participation rate jumped to 62.2, up 0.3 percentage points. Employer demand is still near record highs with 10.9 million open jobs, indicating that employers were continuing to hire and workers were continuing to look for jobs even as Omicron raged.
The Black unemployment rate fell to 6.9 percent after jumping in December. Improvement has been inconsistent, with the Black unemployment rate now more than double the white unemployment rate for the second month in a row.
Working Hours Fall, Hourly Earnings Rise
Average weekly working hours fell to 34.5 from 34.7 in December, showing that Omicron is having an impact as more workers had to cut hours due to illness, quarantine or family obligations. Average hourly earnings rose modestly to 5.7 percent year-over-year, as wage growth continues to remain strong.
Benchmark Revisions Moderately Increase 2021 Jobs Growth
Revisions to employment benchmarked at March 2021 added 374,000 jobs, despite initial estimates of a -166,000 revision. Over the year, jobs growth was revised upward to 6.7 million from 6.4 million, pushing the record high even higher. The revisions were largest in leisure & hospitality (-334,000), indicating that jobs growth in the ailing sector was even weaker than originally reported, while employment levels were revised up in transportation & warehousing (+242,700), a beneficiary of e-commerce and delivery trends, and government (+317,000)
What to Expect in 2022
With the Omicron wave now on the downswing, the disruption from Omicron is likely to begin fading in the coming months. So far, the recovery is persisting despite Omicron. Employer demand remains high and hiring is likely to remain strong, especially once Omicron fades. Today’s report is a positive surprise, indicating that the job market remains on track for recovery, even as the pandemic rages.