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US labour market posts strong job gains despite Omicron surge

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WASHINGTON: The US economy created far more jobs than expected in January despite the disruption to consumer-facing businesses from a surge in Covid-19 cases, pointing to underlying strength that should sustain the expansion as the Federal Reserve starts to raise interest rates.


The Labour Department’s closely watched employment report on Friday also showed job growth in December and November was stronger than initially estimated. The upbeat report ended days of anxiety among economists and White House officials who had frantically tried to prepare the nation for a disappointing payrolls number.


“It confirms that each successive wave of the virus is having a smaller and smaller impact on activity and labor demand,” said Brian Coulton, chief economist at Fitch Ratings.


Nonfarm payrolls increased by 467,000 jobs last month, the survey of establishments showed. Data for December was revised higher to show 510,000 jobs created instead of the previously reported 199,000. Economists polled by Reuters had forecast 150,000 jobs would be added in January. Estimates ranged from a decrease of 400,000 to a gain of 385,000 jobs.


Part of the broad increase in payrolls likely reflected low layoffs after the holiday hiring season because of worker shortages. Actual employment in January typically falls, but the model used by the government to strip out seasonal fluctuations from the data accounts for this by adding about 3 million jobs to produce the seasonally adjusted figure.


The government also reported that 374,000 more jobs were created in the 12 months through March 2021 than previously reported.


The labour market resilience could alter expectations that economic growth would slow significantly in the first quarter after robust growth in the fourth quarter.


It also clears the way for the US central bank to raise interest rates in March to tame high inflation. Economists expect as many as seven rate hikes this year.


Economists had been bracing for a weak jobs report as the government surveyed businesses for payrolls in mid-January, when Omicron infections were peaking. The Labour Department estimated that 3.616 million people who had a job were not at work during the survey week because of illness.


Workers who are out sick or in quarantine and do not get paid during the payrolls survey period are counted as unemployed in the establishment survey even if they still have a job. Lower-paid hourly workers in industries like healthcare as well as leisure and hospitality, who typically do not have paid sick leave, bore the brunt of the winter Covid-19 wave.


— Reuters


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