Here’s why the rest of the job recovery will be bumpy

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“The pandemic has always been at the helm of this recovery,” Nela Richardson, chief economist at ADP, said during a call to reporters on Wednesday. “The name of the job recovery game is still ‘spotty’.”

Last year the job market was quite fragile and during the colder months the struggling leisure and hospitality industry lost jobs which could happen again this year. Meanwhile, hundreds of thousands of women left the workforce in September 2020 as the children returned to virtual classrooms and parents had to step in as teaching assistants.

It remains to be seen whether either of these phenomena returns.

Economists polled by Refinitiv predict that half a million jobs were added to the economy last month, revised up from previous estimates of 473,000 more jobs. The the unemployment rate is is expected to decline to 5.1%, just a hair below the August rate of 5.2%.

That would be more than double the disappointing 235,000 jobs that were added in the August report, which underperformed expectations by around half a million.

The ADP jobs report, a different tally of private sector jobs, showed 568,000 jobs added in September, more than economists had expected. The ADP numbers and the official government tally are not correlated, but last month both reports significantly underperformed forecasts.

Even though September is better than expected for jobs, the recovery continues on its rocky path.

Widespread labor shortages have been a big asterisk on the resumption, with regard to child care, exposure to the virus and some workers while waiting for better job opportunities, kept people at home.

“While jobs have improved from August… initial unemployment insurance claims have increased in recent weeks,” said Richardson. “Leisure and hospitality was once again the fastest growing industry. … However, companies still struggle to find workers. “
Last week, 326,000 Americans filed for unemployment benefits, adjusted for seasonal fluctuations. This was less than economists had predicted, as well as a decrease from the previous week. That said, weekly benefit claims are still above their Sept. 4 lows during the pandemic.

Without the seasonal adjustments, 258,909 claims were filed last week.

The government’s subsidized unemployment benefits expired in early September. Economists are undecided about how generous pandemic benefits have contributed to the labor shortage. Friday’s report could offer some evidence one way or another.

“The report will most likely reflect a mix of hiring constraints related to Hurricane Ida and the reopening of schools and daycares, as well as seasonal adjustments in the education sector that could weigh on the high estimate. level, ”said Joe, chief economist of RSM. Brusuelas said in a note.

The Federal Reserve will closely monitor Friday’s data. The central bank has indicated that it will soon cancel its massive stimulus package in the event of a pandemic. Some central bank policymakers still want to see more progress in the job market, but Fed Chairman Jerome Powell said last month he didn’t need to see a “knockout” report. “.

The Bureau of Labor Statistics will release the September employment report at 8:30 a.m. ET Friday.

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