The increase of just 49,000 positions in January made scarcely any dent in the nearly 10 million jobs that remain lost since the virus intensified nearly a year ago. The tepid increase followed a decline of 227,000 jobs in December, the first loss since April.
The unemployment rate fell sharply in January from 6.7% to 6.3%, the Labor Department said Friday. Most of the drop in unemployment occurred because some people out of work found jobs, but others stopped looking for work and were no longer counted as unemployed.
Even last month's small job gain benefited from a technical adjustment to the government's data. And without an increase of 80,000 temporary jobs, the economy would have posted a net loss for January.
"What you have is a lousy report that shows a stalling recovery," said Nela Richardson, chief economist at the payroll processor ADP.
Soaring new virus infections in late fall had forced tighter business restrictions in California, New York, Virginia and other states, thereby reducing the need for workers. Consumers have also been less willing to dine out, travel or go to concert halls and other venues as the pandemic has persisted. Some business closures, notably in California, have since been eased or lifted, but in many cases too late to affect last month's jobs data.
Economists are increasingly hopeful that as vaccinations reach a critical mass in the coming months and the government provides further stimulus, the economy and the job market will strengthen much faster than they did after previous recessions. Bank of America estimates that growth could reach 6% this year, which would be the fastest since 1984.
"The tunnel we're in does have a light," Richardson said. "It's later this year when the U.S. economy is reopened, and after widespread inoculation and maybe stimulus. This is not the end of the story by any means. But it does show the recovery could use more support."
Gregory Daco, chief U.S. economist at Oxford Economics, forecasts that 6.6 million jobs could be regained by the end of this year, though that would still leave the U.S. economy several million short of its pre-pandemic level.
Last month, service industries that deal with customers in person again posted the sharpest job losses as millions of consumers continue to hunker down at home. Within the service sector, restaurants, bars and hotels slashed 61,000 jobs. Retailers cut nearly 38,000 jobs. Employment in transportation and warehousing fell by 28,000.
Those declines probably would have been even worse if not for a quirk in the government's calculations. The government uses seasonal adjustments to try to filter out the impact of short-term changes that don't reflect underlying economic trends. One such short-term change involves temporary retail employees who are hired for the holiday shopping season.
Retailers typically hire extra staff for the holiday season and then let them go in January. The government's seasonal adjustments factor in this pattern to avoid showing a huge job gain before the holiday season and then a huge job loss afterward. This time, though, holiday hiring was weaker because of the pandemic, and so layoffs in January weren't as large as they typically are. As a result, the seasonal adjustment process likely inflated last month's hiring gain.
Women continue to be hurt disproportionately by the economic damage from the pandemic, which has led some of them to quit jobs to care for children or eliminated the jobs that many held in the hospitality industry. The proportion of women who either have a job or are looking for one declined in January, By contrast, the proportion for men remained flat.
The hardships that millions of Americans are suffering have fueled President Joe Biden's push for a $1.9 trillion rescue aid package, which would provide $1,400 checks for most U.S. individuals and a $400 weekly unemployment payment on top of state benefits. The package would also extend two federal jobless aid programs, from mid-March through September.
The weak January jobs data could lend further political impetus to Biden's package. Early Friday, the Senate approved a budget measure that would let Democrats muscle Biden's $1.9 trillion plan through the chamber without Republican support. The measure now returns to the House, where it will have to be approved before work on the aid package will begin in several congressional committees.
Amy Cooper of Burlington, North Carolina, is among those struggling to find a job amid the pandemic, which has made her nervous about working in restaurants, where she'd worked before. Last spring, she quit a job at a deli because of a difficult pregnancy with her fifth child. After giving birth, she found a six-month contract job to do political polling from home. That ended in December. She and her husband, who is working at a factory, are fighting an eviction that may occur once a federal moratorium ends in March.
Cooper hopes to be able to work from home but is willing to take anything at this point. She's had two interviews during her job hunt but no offers. She says she'd be willing to relocate.
"There's nowhere to move," said Cooper, 32. "There's no jobs and no houses."
Some hopeful signs have emerged recently to suggest that the economy might be picking up a bit. Auto sales rose solidly in January. And a gauge of business growth in the service sector picked up to its highest level in two years. It also showed that services firms added workers last month. A separate measure of manufacturing indicated that factories are also expanding. So is spending on home construction, as sales of existing homes actually soared last year to the highest level in 14 years.