The jobs recovery has hit a roadblock: The US jobless rate hasn’t improved since the fall and economists don’t have high hopes that this changed in January.
Economists predict the US jobless rate stayed put at 6.7% in the first month of 2021, which would be the third month in a row with no change. Eleven months into the pandemic, 10 months into the jobs crisis and nine months into the ostensible recovery, this is a very bad sign.
The average expectation for jobs added in January is 50,000. That would be a welcome turnaround from the 140,000 jobs lost in December, which was the first monthly loss of jobs since April. If the January forecast holds true, America will still be down nearly 10 million jobs since last February.
But there’s a chance the government’s jobs report, due out Friday at 8:30 am ET, could be better than expected.
Wednesday’s ADP employment report showed private payrolls rose by 174,000 positions in January, far greater than economists expected. And while the ADP report and the government report aren’t correlated, such a big jump bodes well for the official jobs figures.
Coupled with recent positive surveys of the manufacturing and services sectors, “there may actually be … wait for it….. upside risk to this Friday’s payroll report,” wrote BMO senior economist Jennifer Lee in a note on Wednesday.
Here’s to hoping.
On Thursday, the Labor Department reported weekly jobless claims fell more than expected in the final week of January, leading to some more optimism about a potential positive surprise in Friday’s jobs report.
All eyes on the vaccine rollout
America’s job market has gone through a tremendous rebound since the economy ground to a halt last spring, adding back millions of jobs over the summer. Even so, the nation remains in a labor crisis.
More than 18 million people received some form of government benefits in the week ended January 9, according to the Department of Labor.
Meanwhile, the hospitality and leisure industry — which includes restaurants and all kinds of in-person entertainment — continues to bear the brunt of the crisis.
“In fact, the food services and drinking places sector was the largest single source of the gap between December’s employment level and pre-pandemic levels,” said Indeed economic research director Nick Bunker in emailed comments. On top of that, all the jobs lost in December were held by women.
The sectors can’t get fully back to normal until the virus is under control or the pandemic ends. Economists — and politicians — are betting that the vaccine rollout will be the cure-all for the economy.
But the rollout is still in its infancy: so far nearly 33 million vaccine doses have been administered in the United States, but only 6 million people have received the all-important second dose, according to data from the Center for Disease Control and Prevention.
The Congressional Budget Office said in a report Monday that the number of employed Americans won’t be back to pre-pandemic level until 2024.
President Joe Biden’s plans — including the goal to deliver 100 million doses of the coronavirus vaccine in his first 100 days, as well as his proposed $1.9 trillion stimulus package that would include more aid for the jobless — can help weather the storm.
But as to how long it will take the nation to recover fully from this jobs crisis — that remains the great unknown.