US added more jobs than expected in January, defying Omicron

[WASHINGTON] US employers added more jobs than forecast last month, despite a surge in Covid-19 infections and related business closures.

Nonfarm payrolls increased 467,000 in January after an upwardly revised 510,000 gain in December, a Labor Department report showed on Friday. The unemployment rate ticked up to 4 per cent, and average hourly earnings jumped.

The median estimate in a Bloomberg survey of economists called for a 125,000 advance in payrolls, though forecasts ranged widely. A variety of factors including Omicron and the way workers who are home sick are factored in make interpreting the January data challenging.

In a surprise display of strength, the labour market continued to improve last month, weathering record-high levels of coronavirus infections and the resulting absenteeism from work.

The data further reinforce Federal Reserve Chair Jerome Powell's description last week of the labor market as "strong" and validate the central bank's intention to raise interest rates in March to combat the highest inflation in nearly 40 years.

The potential for a weak - or even negative - payrolls print, largely because of virus-related disruptions, was well telegraphed in the days ahead of the report, including by White House and Federal Reserve officials.

Meanwhile, the Labor Department's report showed average hourly earnings rose 0.7 per cent in January and 5.7 per cent from a year ago, further fanning concerns about the persistence of inflation. The average workweek dropped.

The faster-than-expected advance in pay could fuel market concerns about the Fed taking an even more aggressive stance on inflation this year.

BLOOMBERG