Iowa’s economy grew strongly in December; then omicron wave hit, latest job figures show


Before the omicron wave of the coronavirus swept through Iowa, the state’s factories were coming back to life, the latest federal jobs figures show.

Payrolls for durable goods manufacturing increased 6,000 in December, according to the U.S. Bureau of Labor Statistics figures on Iowa’s economy, released Tuesday. The hiring at factories making everything from tractor parts to metal roofs offset a run of layoffs the month before.

On the strength of those hires, December was the best month for the state’s economy since March, according to the report. Iowa employers added 11,700 workers, a strong showing after they hired a combined 4,000 employees in the months of October and November.

More: Newton leaders say tough lessons learned from Maytag’s closing will help it recover from TPI job losses

Overall, the state’s unemployment rate dropped to 3.5% in December from 3.7% the month before, ranking 20th lowest in the nation. The U.S. unemployment rate for December was 3.9%.

Iowa’s unemployment rate was 2.9% in February 2020, a month before the pandemic caused massive business shutdowns.

“Growth and recovery continue throughout Iowa, with positive trends across many sectors of our state’s economy,” Iowa Workforce Development Director Beth Townsend said in a statement Tuesday.

However, the jobs figures measure growth through the first half of December, before the omicron variant of COVID-19 was infecting Iowans at a rate unseen since 2020. The virus has strained employers as they try to maintain sufficient staffing to keep their factories and shops running. Production and shipping slowdowns in other parts of the country may be hurting Iowa businesses, as well, experts say.

Some factory owners told the Des Moines Register earlier this month that up to 10% of their production employees were missing shifts because of the virus

Analysts forecast decline in U.S. jobs in January

According to the U.S. Census Bureau’s Household Pulse survey, conducted at the end of December and beginning of January, about 285,000 Iowans reported losing work within the previous four weeks. That’s a 30% increase over reports at the beginning of December.

Meanwhile, about 89,000 Iowans said they had left or lost a job or took or had taken unpaid leave to care for children, the latest survey shows. That’s a 90% increase over the period in early December.

In light of the rise of COVID-19 cases, some forecasters decreased their economic outlook for the first three months of 2022.

Analysts expect January job numbers to show a decline in employment across the country for the first time in more than a year. The Bureau of Labor Statistics will release the national figures Feb. 4. Iowa’s January jobs report won’t come out until March 14.

Some economic observers told the New York Times that the latest coronavirus wave may impact the economy differently than previous waves did. One reason: The federal government has since cut off aid programs intended to offset layoffs, including increased unemployment benefits and monthly child care tax credits.

The drop in household income could decrease demand for certain goods. However, while creating a strain for some families, it could slow inflation.

“That stimulus pay really helped push people past their reticence and say, ‘It’s OK to spend,'” Nela Richardson, chief economist for the payroll company ADP, told the Times. “Now, there’s no big push in stimulus, and so people might change their spending behavior.”

More: ‘We’re in a critical moment’ to slow omicron COVID spread, UI Hospitals leader tells Iowans

Despite recent growth, Iowa’s economic recovery still lags nation’s

Aside from the state’s factories, the employment report shows Iowa’s economy benefited from holiday shopping. Retail trade companies hired 1,300 workers in December, wholesale traders hired 1,000 employees, and accommodation and food services businesses added another 1,000 workers.

At the same time, professional, scientific and technical services employers shed 500 employees. Other sectors seeing declines: finance and insurance (400 jobs), health services (300), local government (200) and the federal government (100).

Since the COVID-19 pandemic began, Iowa’s recovery continues to lag that of the rest of the nation. The state has recovered 80% of the jobs lost in the first few months of the pandemic. Nationally, the country has recovered about 84% of jobs lost.

State officials are trying to bring more people back to work with changes to Iowa’s unemployment system. Compared to last year, claimants have to look for more jobs each week. The state also requires those claimants to meet with career counselors.

During her Condition of the State address earlier this month, Gov. Kim Reynolds called on the Legislature to pass a bill decreasing the number of weeks a claimant can receive unemployment benefits to 16 from 26.

However, the Bureau of Labor Statistics figures show that unemployment is not the biggest factor restraining the state’s economy. Through December, there were 57,900 unemployed Iowans, an increase of 8,000 over the state’s pre-pandemic figure. But the number of people in the state’s labor force declined by an even greater figure: 65,200.

These are workers who are neither receiving unemployment nor looking for work — Iowans who, for example, may be staying home because of health concerns or a lack of child care or because they retired early as a result of the pandemic.

Compared to February 2020, no sector in Iowa has lost more workers than health services, which has shed 10,300 jobs through December. The next biggest losses were in the accommodation and food services sector, local government, educational services and durable goods manufacturing.

At the same time, nondurable goods manufacturers have increased employment by 4,000. That sector includes makers of perishable items, like most food products. Retail trade has added 2,800 jobs and transportation has added 1,000.

More: Here’s how Iowa’s unemployment compensation requirements will change

Tyler Jett covers jobs and the economy for the Des Moines Register. Reach him at, 515-284-8215, or on Twitter at @LetsJett.

Read More: Iowa’s economy grew strongly in December; then omicron wave hit, latest job figures show

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