Robust US job growth expected in March, jobs deficit remains large

WASHINGTON (Reuters) – U.S. employers likely stepped up hiring in March amid an increase in vaccinations and an increase in pandemic relief funds from the government, which would cement expectations of a boom that could push this year’s economic growth to its strongest since 1984.

The Ministry of Labor’s closely watched employment report on Friday is also expected to show people, mostly women, returning to the workforce, drawn by the enlightening economic outlook. But the job market is not out of the woods yet, the job deficit still huge and long-term unemployment entrenched.

“The economy is on fire, fueled by vaccines and government stimulus,” said Sung Won Sohn, professor of finance and economics at Loyola Marymount University in Los Angeles. “All the stars are lined up to surprise us on the rise.”

Non-farm payrolls likely increased by 647,000 jobs last month after rising 379,000 in February, according to a Reuters survey of economists. It would be the biggest gain since October. Estimates ranged from as few as 115,000 to 1.1 million jobs.

Friday’s report marks a painful anniversary for the labor market. The March 2020 jobs report was the first to reflect mandatory closures of non-essential businesses such as restaurants, bars and gyms to slow the onset of the emerging COVID-19 pandemic. Almost 1.7 million jobs were lost that month, and an additional 20.7 million would disappear the next day.

Even if the March 2021 job gains were estimated, that would leave the labor market about 8.8 million jobs below its peak in February 2020. Economists estimate that it would take at least two years to recover the most. of 22 million jobs lost during the pandemic.

As of Tuesday morning, the United States had administered 147.6 million doses of COVID-19 vaccines nationwide and distributed 189.5 million doses, according to the United States Centers for Disease Control and Prevention. The White House’s massive $ 1.9 trillion pandemic relief package, approved in March, sends additional checks of $ 1,400 to qualified households and new funding for businesses.

This led to a significant improvement in labor market conditions last month. Reports this week showed that a measure of factory employment jumped in March to the highest since February 2018, while layoffs announced by US companies were the fewest in addition to 2-1 / 2 years.

Small businesses also reported hiring more workers, and the Conference Board’s household employment measure rebounded after three consecutive monthly declines.

Employment gains last month were likely driven by the leisure and hospitality industry, which has suffered the brunt of the pandemic. A sharp increase in hiring is expected in factories as well as on construction sites after being held back by unusually cold weather in February.

SLOPED REQUEST

Economists expect job growth to average at least 700,000 per month in the second and third quarters. That, combined with the fiscal stimulus and about $ 19 trillion in excess savings accumulated by households during the pandemic, is expected to trigger a powerful wave of pent-up demand.

Estimates of gross domestic product for the first quarter are at an annualized rate of 10.0%. The economy grew 4.3% in the fourth quarter. Growth this year could exceed 7%, which would be the fastest since 1984. The economy contracted 3.5% in 2020, the worst performance in 74 years.

“Hiring is expected to increase significantly as COVID cases are expected to continue to decline, the economy will reopen more fully when herd immunity is reached, and the benefits of the fiscal stimulus, in part, fuel the release of pent-up demand. Said Sam Bullard, senior economist at Wells Fargo Securities in Charlotte, NC.

Strong job growth has likely lowered the unemployment rate, which is expected to drop to 6.0% from 6.2% in February. The unemployment rate has been underestimated by people mistakenly classifying themselves as “employed but absent from work”.

The early return of more people to the labor market could even increase the unemployment rate. The labor force participation rate, or the proportion of working-age Americans who have or are looking for a job, is expected to have risen slightly from its lowest level in nearly 50 years. More than 4 million workers, more than half of whom are women, have left the labor market since February 2020.

“As more schools increase in-person instruction, we may see a rebound in women’s participation in the workforce, perhaps enough to increase women’s unemployment rate as they start. looking for a new job, ”said Erica Groshen, senior economic adviser at Cornell University’s School. industrial and professional relations.

The share of long-term unemployed Americans likely remained high in March, leading to skills erosion that could make it harder for many to find better-paying jobs. At least 18.2 million Americans were collecting unemployment checks in mid-March.

“The result is scarring in the workforce that will be difficult to overcome,” said Joe Brusuelas, chief economist at RSM in New York. “Studies have shown that the length of time a person is out of work affects the likelihood of that person finding a job.”