U.S. employers resumed hiring in January, but the weak pace of job gains suggested a long road remains for the recovery. The U.S. economy added 49,000 jobs last month. The small gain came after payrolls fell steeply in December, the first decline since the coronavirus pandemic triggered business shutdowns last spring. The unemployment rate fell to 6.3% in January from 6.7% a month earlier, in part reflecting fewer people searching for jobs.
Jobs grew strongly in business and professional services, mainly in temporary help roles, the Labor Department said in its January report on U.S. employment. Many sectors, though, lost jobs last month. The leisure and hospitality sector shed 61,000 jobs, following a steep decline of 536,000 in December. Retailers and warehouses cut jobs in January after adding jobs strongly over the holidays.
The unemployment rate decline in January was driven by two factors. More people dropped out of the labor force—meaning they weren’t actively looking for a job and may have grown frustrated with their employment prospects. Also, the number of people reporting themselves as employed increased, consistent with a generally upward trend in hiring since last spring.
U.S. stocks rose after the jobs figures were released, as investors considered whether lackluster January gains could improve the chance of additional federal pandemic relief.
President Biden met Friday with top House Democrats ahead of a vote to advance his $1.9 trillion relief package, following an earlier Senate vote. Republicans have pressed for a smaller plan.
“It’s very clear our economy is still in trouble,” Mr. Biden said Friday, referencing the millions of people out of work.
A separate Commerce Department report showed the U.S. trade balance with China improved last year, narrowing by 10% to $310.08 billion as the U.S. exported more goods such as soybeans, crude oil, corn and cotton to the country. China still accounts for nearly half of the overall U.S. trade deficit, and friction over trade between the two countries is expected to continue in the Biden administration.
The broader economic recovery stalled significantly this winter. Unemployment claims, a proxy for layoffs, have remained above pre-pandemic levels. Consumers cut back on spending, as some were wary of leaving their homes as virus cases surged. Others wanted to shop and dine out, but had limited options.