The U.S. economy added far fewer jobs than expected in December, even with data being collected before the Omicron variant led to a spike in new cases of COVID-19.
According to Bureau of Labor Statistics data, nonfarm payrolls grew by 199,000, far less than the Dow Jones estimate of 422,000. However, the unemployment rate fell to 3.9%, slightly better than the Dow Jones estimate of 4.1%.
The report also found that the “number of persons not in the labor force who currently want a job was little changed at 5.7 million in December. This measure decreased by 1.6 million over the year but is 717,000 higher than in February 2020. These individuals were not counted as unemployed because they were not actively looking for work during the four weeks preceding the survey or were unavailable to take a job.”
“Among those not in the labor force who wanted a job, the number of persons marginally attached to the labor force was essentially unchanged at 1.6 million in December,” the report added. “These individuals wanted and were available for work and had looked for a job sometime in the prior 12 months but had not looked for work in the four weeks preceding the survey. The number of discouraged workers, a subset of the marginally attached who believed that no jobs were available for them, was also essentially unchanged over the month, at 463,000.”
When including discouraged workers and individuals with part-time jobs for economic reasons, the unemployment fell to 7.3%, a decrease of 0.4%.
Additionally, the report found that average hourly earnings have increased 4.7% over the last year. Unfortunately, when accounting for the record high inflation rate of 2021, real average hourly earnings are expected to have decreased over the year.
“The new year is off to a rocky start,” Nick Bunker, economic research director at job placement site Indeed, wrote. “These less than stellar numbers were recorded before the omicron variant started to spread significantly in the United States. Hopefully the current wave of the pandemic will lead to limited labor market damage. The labor market is still recovering, but a more sustainable comeback is only possible in a post-pandemic environment.”