WASHINGTON (Reuters) – U.S. employers were likely to employ the fewest workers in six months in November, hampered by the resurgence of new COVID-19 cases, which, combined with a lack of government aid, threaten to reverse the recovery from the pandemic recession.
The Ministry of Labor’s closely monitored employment report on Friday only covers the first two weeks of November, when the current wave of coronavirus infections began. Infections, hospitalizations, and mortality rates have become climate-friendly, with some economists expecting employment to decline in December or January as businesses impose restrictions in several countries and consumers distance themselves from crowded places such as restaurants.
“The November employment report could be the last‘ strong ’employment report for a while until vaccination becomes widely available,” said Sam Bullard, chief economist at Wells Fargo Securities in Charlotte, North Carolina. “There are signs of increasing stress in the job market, which could translate into smaller monthly wage growth in the winter months.”
According to a survey by economists, Nonfarm’s payroll is likely to have risen last month, with an increase of 469,000 jobs from 638,000 in October. That would be the smallest gain since job recovery began in May and a fifth straight monthly slowdown in job creation, leaving 9.621 million jobs below its February peak.
This would be in line with reports on consumer spending, manufacturing and services, which suggested a slowdown in recovery from the worst recession since the Great Depression. The admission reached 4.781 million in June.
The United States is in the midst of a new wave of COVID-19 infections. Nearly 200,000 new cases were reported on Wednesday, and hospital treatments approached a record 100,000 patients, according to official Reuters data.
Congressional Republicans hit a more active tone during the coronavir virus talks on Thursday when they called for a small $ 500 billion measure previously rejected by Democrats who say more money is needed.
More than $ 3 trillion in government aid, COVID-19, helped millions of Americans unemployed meet their daily expenses, and companies maintained workers ’payrolls, which resulted in record economic growth in the third quarter. The uncontrolled epidemic and the lack of additional fiscal stimulus could result in the economy shrinking in the first quarter of 2021.
“Sometime this winter, we will see another decline in employment, followed by a decline in GDP in the first quarter,” said Sung Won Sohn, a professor of finance and economics at Loyola Marymount University in Los Angeles. “Unlike the first wave, there is no huge government incentive on the horizon to dampen the economy. Interest rates are already zero. “
Job growth last month was likely to be held back by the further departure of temporary workers recruited for the 2020 census. States and local governments are expected to lay off more workers, reducing the government’s general payroll to a second month.
Retailers usually start seasonal rentals in November, a practice that was also supported by the pandemic. Economists expect that this turmoil could overturn the model the government uses to deduct seasonal fluctuations from the data.
Payroll accounting can be a disadvantage. The Institute for Supply Management reported this week on the level of factory employment contracted in November. The Federal Reserve’s “Beige Book” reported that employment increased in all districts on or before November 20, but the U.S. Federal Reserve noted that “in most cases, the pace was slow at best”.
The unemployment rate is projected to fall to 6.8% from 6.9% in October. However, this was biased by the fact that people mistakenly classified themselves as “employees but missed work”. It continues to focus on long-term unemployment and people working part-time for economic reasons.
Economists also monitor women’s share of the labor market. The recession has hit hard the industries that typically employ women. Many women have also stopped caring for children as schools switch to online learning.
The number of unemployed for more than six months rose by 1.2 million in October. It had 6.7 million part-time workers. The long-term unemployment rate rose to 40.9% in October from 35.6% in the previous month.
“Long-term unemployment is always on the decline, but the share of long-term unemployed has been growing extremely fast in a pandemic recession,” said Dean Baker, chief economist at the Center for Economic and Political Research in Washington. “This is important because people who have been unemployed for more than six months tend to have a harder time getting back in work.”
Wages are unlikely to rise in November due to labor market slack. The average hourly wage is forecast to rise by 0.1%, which is in line with the increase in October. The average working week is considered constant, 34.8 hours. Slower growth in jobs and wages would lead to a weakness in the housing pay substitute.
“The slowdown in income and the lack of another fiscal stimulus package will limit household income and spending in the future,” said Kathy Bostjancic, U.S. financial economist at Oxford Economics in New York.
Report by Lucia Mutikani; Edited by Dan Burns and Paul Simao