February 27, 2021

Economix Blog: Jobs Report Preview

On Friday morning, the Labor Department will release its first estimate for the number of jobs created in the United States in August, and right now expectations are low.



Dollars to doughnuts.

Wall Street analysts have a median forecast of just a 60,000 net gain in nonfarm payroll jobs, about half of the gain from July. The unemployment rate — which comes from a different survey, and reflects the share of people who want work and are actively looking for it but can’t find a job — is expected to remain 9.1 percent.

To put this in perspective, the United States generally needs to add about 150,000 jobs each month just to keep up with the growth in the working-age population.

These are among the factors that economists are citing for their weak forecasts:

  1. The latest consumer confidence survey from the Conference Board showed a sharp drop in perceptions of job availability, back to the lowest level since 2009.
  2. A survey from the Institute for Supply Management showed a decline in manufacturing hiring.
  3. Layoff announcements have been higher in the last two months than they were earlier this year, according to a recent Challenger, Gray Christmas.
  4. The recent strike by 45,000 Verizon workers occurred during the week that the Labor Department collects data on employment, and so that may be reflected in the employment and unemployment numbers.
  5. Layoffs by state and local governments are continuing.

Even if the numbers come in just as expected, economists will be scouring the report for any signs of what lies ahead.

Here are some details to keep an eye on:

  1. What’s happening to the length of the workweek? The workweek has averaged 34.3 hours for the two previous months. Economists are expecting it to remain unchanged in August. A slight change, though, would give a sense of whether employers are thinking of expanding or shrinking their staffs, since they usually change hours before making the bigger commitment to hire or fire.
  2. How much are average hourly earnings changing? The consensus forecast is that wages will rise 0.2 percent, after having risen 0.4 percent in July. Wage fluctuations can be important for consumer spending, which drives the economy. Recent surveys have found that consumers have very low expectations for income increases in the next few months.
  3. Finally, are more people dropping out of the work force? The share of working-age Americans who are either working or looking for work has been dropping to record lows. In July, this labor force participation rate was just 63.9 percent, the lowest share since 1984, when there were many fewer women in the work force. Some of the recent decline in the participation rate reflects the retirement of boomers, but it also means many workers are just giving up. This is a bad sign for the future health of the economy, especially if giving up on looking for work now means giving up forever, which it does for many older workers.

Article source: http://feeds.nytimes.com/click.phdo?i=224e06809c4596f36f3d7f2af88325d8

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