US expected to post slowest job growth in six months

WASHINGTON (Reuters) – U.S. employers likely hired the fewest workers in six months in November, hampered by a resurgence of new COVID-19 cases which, coupled with a lack of government relief funds, threaten to reverse the recovery of the pandemic recession.

The Ministry of Labor’s closely watched employment report on Friday will only cover the first two weeks of November, when the current wave of coronavirus infections began. Infections, hospitalizations and death rates have skyrocketed, leading some economists to anticipate a drop in employment in December or January as more jurisdictions impose restrictions on businesses and consumers avoid crowded places like restaurants.

“The November Jobs Report could be the last ‘solid’ jobs report for a while until a vaccine becomes widely available,” Sam Bullard, senior economist at Wells Fargo Securities told Charlotte, North Carolina. “The job market is showing more and more signs of stress, which could translate into lower monthly recruiting gains during the winter months.

Non-farm payrolls likely increased by 469,000 jobs last month after increasing by 638,000 in October, according to a Reuters survey of economists. It would be the smallest gain since the start of the employment recovery in May and a fifth consecutive monthly deceleration in employment gains, leaving employment of 9.621 million jobs below its February peak.

This would be in line with reports on consumer spending, manufacturing and service industries which have suggested a slowing recovery after the worst recession since the Great Depression. Hiring peaked at 4.781 million in June.

The United States is in the midst of a new wave of COVID-19 infections. Nearly 200,000 new cases were reported Wednesday and hospitalizations approached a record 100,000 patients, according to a Reuters tally of official data.

Congressional Republicans took on a more optimistic tone on Thursday in coronavirus aid talks as they pushed for a slim $ 500 billion measure that had previously been rejected by Democrats who say more is needed silver.

More than $ 3 trillion in government COVID-19 relief has helped millions of unemployed Americans cover their daily expenses and businesses keep workers on their payrolls, leading to economic growth record in the third quarter. The unchecked pandemic and the lack of additional fiscal stimulus could cause the economy to contract in the first quarter of 2021.

“We’re going to see another drop in employment this winter, followed by a drop in GDP in the first quarter,” said Sung Won Sohn, professor of finance and economics at Loyola Marymount University in Los Angeles. “Unlike the first wave, there is no massive government stimulus on the horizon to cushion the economy. Interest rates are already zero. “

BIAS AT LOW

Job growth last month was likely held back by further departures of temporary workers hired for the 2020 census. States and local governments are also expected to have laid off more workers, leaving the overall government payroll to shrink for a second consecutive month.

Retailers typically embark on seasonal hiring in November, a practice that has been shaken by the pandemic. Economists expect this disruption could override the model the government uses to eliminate seasonal fluctuations in the data.

The wage bill could surprise on the downside. The Institute for Supply Management reported this week its measurement of factory employment contracted in November. The Federal Reserve’s “Beige Book” report showed that employment increased in all districts on or before November 20, but the US central bank noted that “for the most part, the pace was slow at best.”

The unemployment rate is expected to drop to 6.8% from 6.9% in October. However, it has been biased by people mistakenly classifying themselves as “employed but absent from work”. This will keep the focus on long-term unemployment and people working part-time for economic reasons.

Economists will also keep an eye on the share of women in the workforce. Industries that tend to employ women have been hit hard by the recession. Many women have also left their jobs to care for children as schools have switched to e-learning.

The number of people unemployed for more than six months rose by 1.2 million in October. There were 6.7 million part-time workers. The share of permanent unemployed fell from 35.6% the previous month to 40.9% in October.

“Long-term unemployment always rises in times of downturn, but the increase in the share of long-term unemployed has been extraordinarily rapid in the pandemic recession,” said Dean Baker, senior economist at the Center for Economic and Policy Research at Washington. “This is important because people who have been unemployed for more than six months generally have a harder time getting re-employed.”

The slowdown in the labor market should have left wages barely rising in November. Average hourly earnings are forecast to rise 0.1%, matching October’s gain. The average work week remains at 34.8 hours. Slower growth in employment and wages would lead to a weakness in the net wage indicator.

“Slowing incomes along with the absence of another fiscal stimulus package will limit household income and spending going forward,” said Kathy Bostjancic, chief US financial economist at Oxford Economics in New York.