January jobs report breakdown: Which industries are hiring the most workers?

The U.S. job market began the year on a stunningly strong foot, boosted by a flurry of hiring at bars and restaurants.

Employers added 517,000 jobs in January, the Labor Department said in its monthly payroll report released Friday, easily topping the 185,000 jobs forecast by Refinitiv economists. It marked the best month for job creation since July.

The unemployment rate, meanwhile, unexpectedly dropped to 3.4%, the lowest level since 1969. 

“Why do we think we’re witnessing such strength? The fact is that the service sector still hasn’t seen job-hires return to pre-pandemic levels in places such as healthcare and education and leisure and hospitality,” said Rick Rieder, chief investment officer of global fixed income at BlackRock. “And while we are clearly seeing high profile layoffs in finance and technology, the numbers of jobs required in the more labor-intensive service sectors mentioned previously dwarfs these layoff numbers.”

US JOB GROWTH UNEXPECTEDLY SURGES IN JANUARY AS ECONOMY ADDS 517,000 NEW POSITIONS

Although job gains were broad-based last month, the leisure and hospitality sector – the hardest hit by the COVID-19 pandemic – led the way in hiring, adding another 128,000 workers last month. Bars and restaurants accounted for the bulk of those gains, adding 98,600 workers in January. Hotels saw payrolls grow by 14,800, while amusement, gambling and recreation places onboarded 11,200 workers.

Employment in the leisure and hospitality industry still remains about 495,000 – or 2.9% – below its pre-pandemic levels. 

MAJORITY OF WORKERS REGRET QUITTING DURING THE GREAT RESIGNATION

“The leisure and hospitality sectors added jobs again this month but still roughly a million below pre-pandemic levels,” said Jeffrey Roach, chief economist at LPL Financial. “Companies in these sectors are likely struggling to find workers. Those who worked in these sectors have likely moved on to other industries.”

The professional and business services sector accounted for the second-largest area of growth in January, with payrolls climbing by 82,000. The gains were largely concentrated in the professional, scientific and technical services sector, which added 41,300 workers last month. 

Another big source of job creation in January was the government, which saw hiring climb by 74,000 last month. Within the sector, notable hiring gains took place in state government education (34,700) and local government education (17,300). 

Hiring in the health care industry was another component behind the blowout jobs report. The sector hired about 58,200 employees in January, with the biggest gains in ambulatory health care services (29,900), which includes the offices of doctors, dentists and other health practitioners, as well as medical and diagnostic labs and home health care services.

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Employment in other industries, including retail (30,100), construction (25,500), transportation and warehousing (22,900), social assistance (21,000) and manufacturing (19,000 also increased last month. 

Those increases helped to make up for declines in the information industry, which fell by 5,000 in January. The losses stemmed from a drop of 2,700 in broadcasting and content providers, a 1,400 decline in telecommunications and a 1,300 deficit in the publishing industry.

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