This post was originally published on this site
After a winter of discontent, the U.S. economy is primed to start adding more jobs again. Just don’t expect to see big hiring gains in February.
Here’s what to watch in Friday’s employment report.
Hiring set to rebound
The U.S. likely added 210,000 jobs last month, according to economists surveyed by Dow Jones and the Wall Street Journal. That would have been a good number before the coronavirus, but not right now.
Some 10 million jobs lost during the pandemic still haven’t been recovered, and hiring basically came to a standstill at the end of last year amid a record surge in COVID cases. The economy lost 227,000 jobs in December and regained a scant 49,000 in January.
Read: Unemployment claims rise slightly to 745,000 after Texas power outages
Hiring was probably held back last month by poor winter weather, a still-high number of coronavirus infections and lingering state restrictions on business activity.
The goods news? Most restrictions have been lifted, vaccinations are increasing at an ever-faster pace, the weather is warming and Washington is about to approve up to $2 trillion in in additional stimulus.
Wall Street widely expects hiring to accelerate as the pandemic fades and businesses ramp up production. Gus Faucher, chief economist of PNC Financial Services, predicts job creation will climb to more than 500,000 a month by the middle of the year.
Read: Inflation worries are back. Should you worry?
Unemployment slowly falling
The official unemployment rate is expected to hold steady at 6.3%, but nobody really believes it’s that low.
Economists peg the true jobless rate at closer to 10%. The chief reason is that some 4 million–plus people have dropped out of the labor force since the onset of the pandemic and are no longer counted as unemployed.
Another problem: Some workers who have lost their jobs for good keep telling the government they are unemployed temporarily.
See: A visual look at how an unfair pandemic has reshaped work and home
To get a better sense of how many people are really out of work, pay attention to a lesser known unemployment rate called U6. It includes people who have been too discouraged to look for work and those who can only find part-time jobs.
The U6 rate, often called the “real unemployment rate,” stood at 11.7% in January.
Read: The highest percentage of workers getting unemployment benefits are in these five states
Rejoining the labor force
A flood of people re-entering the labor force would be a surefire sign the economy is on the way to a full recovery. Those who want a job start to search more actively when they actually think they will find one.
Unfortunately, the size of the labor force hasn’t changed much in months. The number of people working or looking for work totaled 160.1 million in January — some 4.29 million fewer compared to the last month before the pandemic.
More people are expected to re-enter the labor force as the economy speeds up, so watch that number closely.
Service-sector job recovery
Restaurants, hotels and entertainment venues bore the brunt of the job losses during the early days of the pandemic and suffered again after the year-end spike in coronavirus cases.
The so-called leisure and hospitality sector lost more than a half-million jobs in December and January, leaving total job losses during the pandemic at 3.9 million.
Hiring and employment probably increased slightly in February as states lifted restrictions, but cold weather didn’t do restaurants and other service-oriented businesses any favors.
The biggest gains won’t come until later in the year after most of the population is vaccinated, but not all the lost jobs are coming back.
