This post was originally published on this site
The U.S. has a surprising labor shortage despite record job openings and millions of people still being unemployed a year and a half into the pandemic. Now the delta variant of the coronavirus is adding to the strains in the labor market.
Here’s what to watch on Friday when the government reports the closely followed U.S. employment report for July.
The jobs forecast
The U.S. likely added an estimated 845,000 new jobs in July, a Wall Street Journal survey of economists shows. Such a gain would be almost be a mirror image of June.
This sounds good, and it would be, but it would still leave the labor market about 6 million jobs short of its pre-pandemic peak. And proportionately the U.S. would have to add even more jobs than that to account for the growth in the population.
The relatively slower pace of improvement in the jobs market threatens to hold back the broader U.S. recovery, but economists predict more people will return to work in the fall once schools reopen and extra federal benefits expire in September.
Read: U.S. jobless claims fall to 385,000 as unemployment shrinks despite delta
Unemployment
The jobless rate is forecast to fall a few more ticks to 5.7% from 5.9%. Again, good news, but less than meets the eye. However, the true measure of unemployment is likely two to three points higher, economists say, as government statisticians have had trouble getting a precise estimate of the number of unemployed. For instance, some jobless workers say they still have a job or that they are working even when they are not.
Before the pandemic, the unemployment rate had fallen to a 50-year low of 3.5%.
Summer funkiness
July is always a tricky month for government economists when they adjust the employment figures for seasonal variations.
Auto plants usually shut down for a few weeks to retool plants, for one thing. Many people employed by schools — think bus drivers and cafeteria workers — are temporarily out of work in mid-summer. And lots of young people or immigrants are hired for summer jobs.
The pandemic has made it even more difficult to adjust the jobs numbers for seasonal swings. So don’t be surprised if there is a big surprise, especially with government employment.
Read: ADP says U.S. private sector added 330,000 jobs in July, well below expectations
At your service
After severe struggles last year during the pandemic, restaurants, hotels, theaters, vacation resorts, casinos and other service providers have experienced a rebirth. Business has picked up sharply since the spring, owing to the explosion in demand as businesses have reopened and Americans have started to eat out and travel again.
Meeting all the demand has been the biggest problem. Lots of companies can’t find enough workers and some have had to scale back hours or resort to automation.
Employment in services has grown rapidly and it probably did so again in July, but a telling question is whether it can match the 642,000 increase in June. Anything significantly less than that would not be a good sign.
Read: A big part of the economy just saw explosive growth, but delta poses threat
Missing labor
The percentage of able-bodied Americans either working or looking for work stood at 61.6% in June and basically hasn’t budged in a year. The last time it was this low was in 1976.
Read: When will the labor force’s ‘missing millions’ return?
This is a big problem for the economy. It can’t grow or recover faster if more people don’t rejoin the labor force.
