January Jobs Data: A Mixed Story

By at 5 February, 2021, 5:26 pm

by Raymond J. Keating-

The monthly employment report from the U.S. Bureau of Labor Statistics always requires a bit more explanation than other releases on the economy given that it is based on two surveys, with payroll employment numbers coming from the establishment survey, and numbers like the employment-population ratio, labor force participation rate and unemployment rate coming from the household survey. But January numbers get a little funkier as population estimates are adjusted at the start of the year.

Understanding that, the story on jobs for January was mixed. First, the establishment survey pointed to little change in nonfarm payroll employment at an increase of 49,000.

Meanwhile, the household survey – which tends to better capture startup and small business activity – pointed to (after controlling for the population changes to get at comparative data) an increase in employment in January of 381,000. That’s a notable gain.

At the same time, however, the civilian labor force actually declined by 206,000 in January.

So, about two-thirds of the drop in the unemployment rate – which went from 6.7 percent in December to 6.3 percent in January – was due to employment gains, and a third due to a decline in the labor force.

Finally, to put in perspective how the jobs picture has changed over the past year, the labor force participation rate registered 61.4 percent in January 2021. That compared to 63.4 percent in January 2020, and to the pandemic low of 60.2 percent in April 2020.

Source: Federal Reserve Bank of St. Louis, FRED

Also, the employment-population ratio stood at 57.5 percent in January 2021, versus 61.1 percent a year earlier, and up from the pandemic low of 51.3 percent in April 2020.

Source: Federal Reserve Bank of St. Louis, FRED

So, progress has been made in regaining some ground on the jobs front. But much more ground needs to be covered to get back to pre-pandemic levels, never mind where labor force and employment levels stood before the previous recession of December 2007 to June 2009.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.


News and Media Releases