U.S. Jobs Surged by 467,000 in January as Economy Weathered Omicron

“We’re seeing a more resilient, more prepared U.S. labor market than we’ve seen in the past,” said

Becky Frankiewicz,

president of ManpowerGroup North America.

U.S. stocks moved higher and government bond yields climbed sharply after the better-than-expected jobs report.

January payrolls might have been stronger if not for the surge in Omicron cases. The Labor Department said nearly two million workers were prevented from looking for a job last month because of the pandemic. And the number of Americans who said they were unable to work because their employer closed or lost business due to the pandemic nearly doubled in January from December.

The unemployment rate rose slightly in January to 4% from 3.9% in December, with more people joining the workforce. Historically low joblessness is helping spur wage growth. Wages climbed 5.7% in January from a year earlier, nearly double the average of about 3% before the pandemic hit.

The combination of low unemployment and strong wage growth is expected to keep the Federal Reserve on track to start lifting interest rates from near zero at its policy meeting next month. Policy makers see an urgent need to bring down inflation that recently hit its highest level in nearly four decades.

Workers have more incentive to return to the labor market than they did a year ago due to the prospect for a bigger paycheck, a rundown in pandemic savings and an improving health situation. The labor-force participation rate, or the share of the population working or seeking a job, rose to 62.2% last month, the highest level since the pandemic hit in early 2020. The Labor Department attributed the increase to the introduction of new population estimates with January’s data.

Employers added 6.67 million jobs last year, or just over 200,000 more positions than previously reported for 2021, according to annual revisions released in Friday’s report.

Those revisions, conducted each January, included changes in how the Labor Department estimates seasonal employment patterns to capture pattern changes due to the pandemic. The revisions included downward adjustments last summer, which were offset by revised gains later in the year.

Auto manufacturers shed jobs last month. Most other sectors fared better, including Covid-sensitive ones such as leisure and hospitality that had pulled back hiring during previous surges in infections. Companies in some industries that typically rein in hiring after the holiday season, such as retail and transportation and warehousing, added to payrolls in January.

H&R Block Inc.,

a tax-preparation company, is in hiring mode, as tax season gets under way.

“Everyone has got to get their taxes done,” said

Tiffany Monroe,

H&R Block’s chief people and culture officer.

The company has been able to retain tax professionals, such as certified accountants and tax advisers, from previous years because they have close relationships with their clients, Ms. Monroe said. But H&R Block is finding it more challenging to retain and hire entry-level receptionists to greet clients and take calls across its offices.

“We’re definitely going after the same people that a lot of the other retailers are going after,” said Ms. Monroe. H&R Block is emphasizing to receptionists that they can advance into a leadership position or a tax-professional job, she added.

There are roughly 60 unemployed people for every 100 job openings, meaning just about anyone who wants a job can find one. Still, workforce participation remains below pre-pandemic levels. As a result, many companies are raising pay as they compete for labor.

Wages grew briskly in January from December in some higher-wage industries including professional and business services. Meanwhile, pay in leisure and hospitality—which has surged 13% over the past year—logged softer growth than other sectors in January compared with a month earlier.

Omicron still affected parts of the job market in January. The variant sent millions of sick workers into quarantine, exacerbating labor shortages at restaurants, airlines and public-transit systems. About 3.6 million Americans were employed but absent from work due to illness in January, up from two million in January 2021 and 1.1 million in January 2020.

Employee absences are adding to companies’ pandemic-related challenges, including roiled supply chains.

Being a plant manager is the toughest job at paint supplier

PPG Industries,

Chief Executive

Michael McGarry

said in a fourth-quarter earnings call last month.

“They wake up in the morning, check their phone to see how many people call off sick, and then they get to work,” he said. “Before they even have a morning meeting, they’ve had to overcome a number of issues.”

Those include dealing with delays in the receipt of raw materials and other supply-chain disruptions, such as truckers not picking up finished products, Mr. McGarry said.

Economists expect labor-supply constraints to gradually ease this year as factors that held back job searches—including child-care disruptions, pent-up savings and fear of infection—abate.

Write to Sarah Chaney Cambon at sarah.chaney@wsj.com and Gabriel T. Rubin at gabriel.rubin@wsj.com