US ECONOMICS: Daily Roundup of Key Economic Data for Feb. 5
12:18 PM EST, 02/05/2021 (MT Newswires) -- The January employment report was weaker than expected for the second straight month, with payrolls managing only a modest rebound after a sharp December decline and the unemployment rate down as more workers fled the labor force.
Further improvement in the job market is likely in the coming months due to additional stimulus payments and, even more importantly, a wider distribution of the COVID-19 vaccine.
Nonfarm payrolls rose by only 49,000 in January, well below expectations for a larger increase of 100,000 jobs and following downward revisions to payrolls in November (now up 264,000) and December (now down 227,000).
The recent deterioration in payrolls was made up for by a longer average workweek, which means more productivity is being squeezed from those with jobs.
Leisure and hospitality sector payrolls fell by 61,000 jobs in the month after a 536,000 decline in December, but analysts expect this sector to rebound in February. Rollback of COVID-19 restaurant restrictions in many states, especially California, occurred too late in the month to be picked by the survey, but should be reflected in the data for February.
On the upside, temporary help services jobs jumped by 81,000 as displaced workers were able to access the job market through that route.
The unemployment rate fell to 6.3% in January from 6.7% in December, while the wider U-6 unemployment rate, which also includes discouraged workers and is a better measure of the underlying unemployment picture, fell to 11.1% from 11.7%.
While a decline in the unemployment rate is usually a positive, this month it reflects a sharp exodus of unemployed workers from the labor force rather than strongly increased hiring.
Average hourly earnings rose by 0.2% in January after a 1.0% increase in December, keeping the year/year rate at 5.4%.
Released at the same time, the international trade gap narrowed to $66.6 billion in December from $69.0 billion in the previous month, reflecting a surge in exports that was only partially offset by a smaller increase in imports.
Incorporating this week's data, including Friday morning's releases, the New York Fed revised up their first quarter GDPnowcast estimate slightly to 6.79% from 6.48% last week, while the Atlanta Fed said its estimate for the quarter moved down to 4.6% from their 6% previous forecast released on Monday.