January 2021 Jobs Report: A Strong Divergence Between Very Weak Job Gains, But A Big Drop In Unemployment; But The Only Critical Number Is The Doses Of Vaccine Administered 

For the past several weeks, based on the increase in initial jobless claims, I have warned that the December employment report might have a negative number, or at very least a very weak positive. Once again this was an accurate forecast.

There was a strong divergence between the household and establishment reports this month. And to cut to the chase, the only real critical number is the amount of vaccinations administered.

HEADLINES:

• 49,000 million jobs added, only 5,000 of which were in the private sector and 43,000 in government. The alternate and more volatile measure in the household report indicated a gain of 201,000 jobs, which factors into the unemployment and underemployment rates below.
• U3 unemployment rate declined 0.4% at 6.3%, compared with the January 2020 low of 3.5%.
• U6 underemployment rate fell -0.6% to 11.1%, compared with the January 2020 low of 6.9%.
• Those on temporary layoff decreased 293,000 to 2,746,000.
• Permanent job losers increased by 133,000 to 3,503,000.
• November was revised downward by 72,000. December was also revised downward by 87,000 respectively, for a net loss of 159,000 jobs compared with previous reports.

Leading employment indicators of a slowdown or recession

I am still highlighting these because of their leading nature for the economy overall.  These were mixed: 

• the average manufacturing workweek increased to 40.4 hours. This is one of the 10 components of the LEI.

• Manufacturing jobs declined by 10,000. Manufacturing has still lost -592,000  jobs in the past 11 months, or 5% of the total. About 60% of the total loss of 10.6% has been regained.
• Construction jobs decreased by 3,000. Even so, in the past 11 months -256,000 construction jobs have been lost, 3% of the total. About 80% of the worst loss of 15.2% loss has been regained.
• Residential construction jobs, which are even more leading, *rose* by 3,600. Since February there have now been actual job *gains,* and employment in this sector is at another new 10 year+ high.