The January employment picture was much brighter than expected, as the omicron wave of COVID-19 failed to make a major dent in the tight job market. Job creation, wage growth and workforce participation gained as jobless claims fell.
New-vehicle sales were down 10% in January. The seasonally adjusted annual rate (SAAR) of sales improved to 15.0 million from December’s 12.5 million, the result of seasonal adjustments. Manufacturers continue to prioritize retail over fleet, with sales into large fleets falling 36% from a year ago. The average new-vehicle price declined from an all-time high in December, but prices paid continue to exceed MSRPs.
Employment improves: January’s employment report showed little evidence of the impact of the Omicron wave of COVID-19 on a strong labor market.
Job growth slowed moderately to 467,000 jobs created, but only 125,000 new jobs had been expected. In addition, the prior two months of numbers were revised up for a net increase of 709,000 more jobs than originally estimated.
Job creation in private payrolls slowed. Government jobs increased from gains in local education. Leisure and hospitality had the largest gain of 151,000. Auto dealers shed 400 jobs, leaving employment down 87,000 or 6.6% below the February 2020 level.
Wages, labor participation gain: Wage growth accelerated. Average hourly earnings increased 0.7% in January, which was the strongest monthly increase since December 2020. Average hourly earnings were up 5.7% year-over-year.
Labor force participation grew. The labor force participation rate increased to 62.2% from 61.9% in December, which was a high for the pandemic but still down 1.2 percentage points from February 2020. The difference in labor force participation represents 3.2 million fewer people in the labor force compared to February 2020.
The underemployment rate, which is the broadest measure of unemployment, declined to 7.1%, which was the lowest rate yet for the pandemic. It is now just 0.2 percentage points higher than it was in January 2020.
The percentage of the unemployed reporting being on temporary layoff, as opposed to permanent increased to 14.7% in January from 12.9% in December. January’s share was the highest since June and was 4.0 percentage points higher than it was in January 2020.
The January report reflected revisions to payroll numbers back to April 2020 because of the annual benchmark revision process. The revisions leave payrolls down by 2.9 million from February 2020, but the labor force has shrunk by an even larger amount.
Jobless claims fall: Jobless claims fell again as COVID-19 cases fall rapidly. The headline unemployment rate increased to 4.0% in January from a pandemic low of 3.9% in December. As of January 22, 1.63 million Americans remained on traditional unemployment benefits. That number is now 87,000 lower than prior to the pandemic. The broadest measure of continuing benefits declined to 2.07 million, which was 35,000 lower than the 2.10 million level prior to the pandemic.
Initial jobless claims declined last week to 238,000, which is still higher than the level of new claims in December but lower than the peak in mid-January. Initial claims averaged 212,000 per week in 2020 in the weeks before the pandemic began.
Omicron impacts work: Omicron did have an impact on work activity. The Bureau of Labor Statistics reported that 6 million people reported that they had been unable to work in mid-January because their employer closed or lost business due to the pandemic. That number represented an increase of 94% from the number in mid-December. However, 24% of those reporting not being able to work because of COVID-19 received at least some pay from their employer for the hours not worked.
The number of people reporting they were teleworking increased to 15.4% from 11.1% in December.
New-vehicle sales drop: Total light new-vehicle sales in January were down 10% from the year-earlier level with the same number of selling days compared to last year. The January light vehicle SAAR was 15.0 million, down 10% from last year’s 16.8 million and 11% lower than January 2020’s 16.9 million rate.
The SAAR was an improvement from December’s 12.5 million, but the increase was from the seasonal adjustment, not an indication of improving supply or sales. Volumes were down 17.7% in January from December.
Fleet sales fall: Combined sales into large rental, commercial, and government buyers were down 36% year over year in January. Sales into rental declined 61% year over year. Sales into commercial increased 4% year over year, while sales into government declined 23%.
Including an estimate for fleet deliveries into the dealer and manufacturer channel, we estimate that the remaining retail sales were down 6% year over year in January, leading to an estimated retail SAAR of 13.2 million, which was down from 14.1 million last January but up from December’s 11.0 million rate
Prices slip from highs: The average price of new vehicles sold declined from an all-time high in December, but prices paid continue to exceed MSRPs. The average new-vehicle transaction price declined 1.8% in January to $46,404, but the average transaction price exceeded the average MSRP for the eighth consecutive month. [Check back on the Newsroom for a full report later this week.]
EV sales poised to increase in 2022: In case you missed it, I participated in a panel discussion titled Electric Vehicle Strategies: Driving Mass Market Uptake last week at the BloombergNEF Summit in San Francisco. As I noted during the discussion, I believe the EV market is poised for strong growth. This growth will of course be driven in part by fleet activity, which is particularly well suited for EV technology, and from recent and future regulations. But to me, beginning this year, the most interesting growth segment will be new EV pickup trucks. Read the full article.
The next Auto Market Report video will be published on Smoke on Cars on Tuesday, February 15.
Jonathan Smoke is the chief economist at Cox Automotive.