Hiring Pauses Again: What We Learned During the Week of February 1 – 5

The surge in infections around the holidays weighed on job creation. Here are the five things we learned from U.S. economic data released during the week ending February 5.


Payroll gains disappointed in January. Nonfarm employers added a seasonally adjusted 49,000 workers to their payrolls during the month, per the Bureau of Labor Statistics. While a sharp improvement from the 227,000 jobs employers had shed in December, payrolls remained 9.89 million below their pre-pandemic peak last February. Private-sector employers added a mere 6,000 jobs, with only temporary help services (+80,900) reporting a meaningful gain. Shedding workers were leisure/hospitality (-61,000), health care/social assistance (-40,800), retail (-37,800), and transportation/warehousing (-27,800).

Based on a separate household survey, the unemployment rate fell 4/10ths of a percentage point to 6.3 percent, which was its lowest reading since the start of the pandemic but also was well above last February’s 3.5 percent reading. The unemployment rate for college graduates was 4.0 percent, rising to 7.1 percent for those with a high school degree but no college experience and to 9.1 percent for those without a high school degree. The labor force participation rate slipped 1/10th of a percentage point to 61.4 percent with the 25 to 54 participation rate improving by 1/10th of a point to 81.1 percent. Back in February, the two measures were at 63.3 percent and 82.9 percent, respectively. The count of part-time workers desiring full-time work shrank by 216,000 to 5.954 million (February 2020: 4.398 million). The median length of unemployment narrowed by 1.5 weeks to 15.3 weeks (February 2020: 9.0 weeks). Finally, the broadest measure of labor underutilization declined by 6/10ths of a point to 11.1 percent (February 2020: 7.0 percent).

Factory orders increased again in December. The Census Bureau estimates new orders for manufactured goods rose 1.1 percent during the month to a seasonally adjusted $493.5 billion. However, even with eight consecutive monthly gains, factory orders were down 6.6 percent for the year to $5.546 trillion, its worst year since 2016. Durable goods orders gained 0.5 percent in December while those of nondurables rose 1.7 percent. Net of transportation goods, orders advanced 1.4 percent while those for civilian nonaircraft capital goods—a proxy for business investment—increased 0.7 percent. Shipments also rose 0.8 percent during the month ($501.8 billion), but the total the year ($5.680 trillion) was off 5.6 percent from 2019. Unfilled orders shrank for the ninth time in ten months (off 0.3 percent to $1.071 trillion), while inventories widened 0.3 percent to $695.7 billion.

Consumers’ credit card balances shrank in 2020. The Federal Reserve indicates that consumers held $4.184 trillion in outstanding non-real estate backed loan balances at the end of December, up $9.7 billion in December and a modest 0.8 percent for the year. Revolving credit (e.g., credit card) balances narrowed by $3.0 billion during the month and 10.8 percent for the year. Non-revolving credit balances (including student and auto loans) grew by $12.7 billion in December and 3.9 percent from a year earlier.  

Last year’s trade deficit was the largest since 2008. The Census Bureau and Bureau of Economic Analysis report that exports increased $6.2 billion in December to $190.0 billion while imports swelled $3.8 billion to $256.6 billion. The resulting trade deficit of $66.6 billion was down 3.5 percent from November but 45.8 percent ahead of year-ago levels. The goods deficit narrowed by $2.8 billion to -$84.2 billion while the services surplus slipped by $0.4 billion to +$17.5 billion. Boosting the former was increased exports for crude oil, soybeans, capital goods, and automotive vehicles. The U.S. trade deficit for all of 2020 totaled -$678.7 billion, up 17.7 percent from 2019. Exports plummeted 15.7 percent while imports slowed 9.5 percent.

Construction spending rose in 2020. The Census Bureau reports that the seasonally adjusted annualized value of construction put in place increased 1.0 percent in December to $1.490 trillion, which split into gains for private and public sector spending of +1.2 percent and +0.5 percent, respectively. Boosting the former was continued strength in the housing sector—for example, new single-family home construction jumped 5.8 percent (and was up a startling 23.5 percent from a year earlier). Construction spending was up 5.7 percent for all of 2020, with the gain in private sector spending (+6.5 percent) more than double that of the public sector (+3.0 percent).

Other U.S. economic data released over the past week:

  • Jobless Claims (Week ending January 30, First-Time Claims, seasonally adjusted): 779,000, -33,000 vs. the previous week, +578,000 vs. the same week a year earlier). 4-week moving average: 848,250 (+303.9% vs. the same week a year earlier).
  • Vehicle Sales (January 2021, Light Vehicle Sales, seasonally adjusted annualized rate): 16.63 million (vs. December 2020: 16.23 million, vs. January 2020: 16.78 million).
  • Productivity (4th Quarter 2020, Nonfarm Business Labor Productivity, seasonally adjusted annualized rate): -4.8% vs. 2020Q3, +2.5% vs. 2019Q4.
  • Homeownership and Vacancy (4th Quarter 2020, Homeownership Rate, not seasonally adjusted): 65.8% (vs. 2020Q3: 67.4%, vs. 2019Q4: 65.1%).
  • Senior Loan Officer Opinion Survey

The opinions expressed here are not necessarily those of Kevin’s current employer. No endorsements are implied.

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