Covid Uncertainty Hampers Nonfarm Payroll Growth – February 9, 2021

Nonfarm payrolls rebounded in January following a decline in December, but the pace remains below what’s needed to quickly drive employment back to pre-Covid levels.

In January, nonfarm payrolls rose by 49,000 after falling a downwardly revised 227,000, according to the U.S. Bureau of Labor Statistics. As Figure 1 illustrates, employment growth has slowed from the fast pace we saw in the middle of last year.

Notably, the unemployment rate fell from 6.7% in December to 6.3% in January. The decline is encouraging, but the separate Household survey, which measures the rate of unemployment, provided mixed news.

We saw job growth in the Household survey, but we also saw a sharp drop in the labor force, which was responsible for most of the decline in the jobless rate. It appears that some of the unemployed have dropped out of the labor force, i.e., discouraged workers. If one is not actively searching for work, one is not officially counted as unemployed per the U.S. BLS.

Here’s another look at the labor market by level of education. The unemployment rate has yet to return to pre-Covid levels for any of the cohorts, but those with the least amount of education are suffering the most.

Let’s take one more look. Social distancing restrictions, closures, and the fear of going into public places have had a major impact on employment in restaurants and bars. Restaurant & bars accounted for a whopping 26% of the 20.7 million jobs lost in April—see Figure 2. Restaurants & bars accounted for 8% of total employment in January 2020.

In December, the steep drop in jobs at restaurants & bars more than offset gains in other sectors. It suggests that one industry is having an outsized effect on overall employment.

According to Johns Hopkins, daily new Covid cases have fallen sharply from early January but remain over 100,000 per day.

Some industries have adapted and done exceedingly well over the last year. Others that depend on personal interactions have struggled.

Much will depend on the success of the rollout of the vaccines and the trajectory of the virus. The promise of an expanded vaccination schedule is cautiously encouraging.

 

Created 2021-02-09 18:35:41