Jobs -> Defying expectations
Job gains in January far surpassed expectations, which were low going into the report on account of the prominence of Omicron last month. The BLS also revised 2021 levels of employment in its establishment survey after updating its seasonal adjustment models as part of its annual benchmark process. As a result of these adjustments, job gains at the end of the year were actually stronger than first estimated but were lower last summer, netting out to 217k more total payrolls added in 2021 when compared with the data before the adjustments.
On a non-seasonally adjusted basis, the net number of payrolls added in January still declined sharply as a result of seasonal lay-offs, but the degree of the drop was not as large as expected. On a seasonally adjusted basis, January job gains were above average based on longer-term history, and appear consistent with the trend of seasonally adjusted job gains in 2021.
The unemployment rate ticked up modestly. The overall labor force participation rate looks to have jumped in January, but this comes on the back of annual adjustments to the population controls. After accounting for these, the labor force participation rate held at 62.2 percent in January, and the employment-population ratio was little changed at 59.7%.
| Jul-21 | Aug-21 | Sep-21 | Oct-21 | Nov-21 | Dec-21 | Jan-22 | |
|---|---|---|---|---|---|---|---|
| NFP growth, k | 689 | 517 | 424 | 677 | 647 | 510 | 467 |
| UR, % | 5.4 | 5.2 | 4.7 | 4.6 | 4.2 | 3.9 | 4 |
| Prime-age UR, % | 4.9 | 4.7 | 4.4 | 4.1 | 3.7 | 3.5 | 3.5 |
| U6, % | 9.2 | 8.8 | 8.5 | 8.2 | 7.7 | 7.3 | 7.1 |
| LFPR, % | 61.7 | 61.7 | 61.7 | 61.7 | 61.9 | 61.9 | 62.2 |
| Prime-age LFPR, % | 81.9 | 81.8 | 81.6 | 81.7 | 81.9 | 81.9 | 82 |
| EPOP, % | 58.4 | 58.5 | 58.8 | 58.9 | 59.3 | 59.5 | 59.7 |
| Prime-age EPOP, % | 77.9 | 78 | 78.1 | 78.3 | 78.8 | 79 | 79.1 |
| PTER, % of payrolls | 2.9 | 2.9 | 2.9 | 2.9 | 2.7 | 2.5 | 2.4 |
| Long-term UR, % | 2.1 | 1.9 | 1.6 | 1.4 | 1.4 | 1.2 | 1 |
| AHE, % m/m | 0.5 | 0.3 | 0.5 | 0.6 | 0.4 | 0.5 | 0.7 |
| AHE, % y/y | 4.3 | 4.3 | 4.8 | 5.4 | 5.3 | 4.9 | 5.7 |
| Source: BLS, @benbakkum. |
Transportation and warehousing as well as professional service jobs continue to stand out as industries where employment is growing at a strong pace, even though they’re already well above pre-pandemic levels of employment. Retail jobs have essentially recovered to pre-pandemic levels.
The chart below shows the strong pace of this recovery relative to other recessions. After the re-benchmarking, it’s striking how much of straight line the recovery has maintained over the last year.
If the average job growth of the last three months continues at the same pace, the total number of jobs would fully recover to where it would have likely ended up had the pandemic not occurred around the end of 2023. In many ways that would be an even tighter labor market than before the pandemic as the population has aged and a large number of workers have retired in the intervening period.
An aggregate measure of labor market conditions, the Blanchflower-Levin employment gap, shows that slack has ,
Note: the unemployment gap is the difference between the unemployment rate and the non-accelerating inflation rate of unemployment (NAIRU). The participation gap is the difference between the labor force participation rate (LFPR) and the CBO’s estimate of the potential LFPR. The underemployment gap is the difference between the number of employees working part-time for economic reasons as a percentage of the labor force, adjusted for the difference in the average number of hours worked by part-time and full-time employees, and the 1994-2007 average of this calculation.
