49,000 jobs added to US economy in January
The US economy added 49,000 jobs in January, with the unemployment rate falling from 6.7% to 6.3%.
The consensus of an economist survey was for there to be 50,000 jobs added and the unemployment rate to remain unchanged.
The new unemployment figure of 6.3%, while well down on April’s peak high of 14.7%, is still around twice the pre-lockdown level, the report stated.
The numbers show signs of an improvement, however, they are slight and give little indication of the longer-term prospects of the US economy.
“While these numbers are an improvement, in truth, the US labour market is difficult to read in the current climate – mainly due to differing levels of Covid restrictions on a state-by-state basis,” said Robert Alster, CIO at investment management firm Close Brothers Asset.
Following the report the S&P 500 opened higher and touched intra-day record highs.
While the non-farm payroll report showed a dip of 10,000 manufacturing jobs, data over the past eight months has been positive with 803,000 manufacturing jobs added since April.
With encouraging signs for manufacturing, attention will now turn to Joe Biden’s stimulus package in hope of a more sustained economic recovery.
“On a positive note, figures show manufacturers are seeing an uptick in demand which will help support jobs on that side of the economy. However, it remains to be seen whether President Biden’s $1.9 trillion Covid relief plan gets through the Senate,” Alster said.
Beyond the stimulus package the government’s vaccine roll out will play a vital role in further lowering unemployment figures, according to Robert Alster.
“Overall, health policy is what matters most for unemployment and with the White House focused on the vaccine roll out, alongside mandating face masks, we could continue to see green shoots in the coming weeks and months,” he said.