The latest clues to the state of the nation’s economic recovery will come Friday morning when the Labor Department releases its June jobs report.
Economists expect payroll gains to top 700,000, an increase from the 559,000 announced for May. Analysts surveyed by MarketWatch predict that the report will show the unemployment rate declining to 5.6 percent from 5.8 percent.
The report follows several promising economic developments this week. Consumer confidence, which surged in June, is at its highest point since the pandemic’s onset last year. Stocks closed out the first half of the year at record highs, and businesses’ plans for capital investments are rising. The Congressional Budget Office said Thursday that the economy was on track to recover all the jobs lost in the pandemic by the middle of next year. And the budget office and the International Monetary Fund both projected U.S. economic growth at or near 7 percent for the current year, the biggest surge since 1984.
Still, Sarah House, a senior economist with Wells Fargo, noted, “This is a trickier phase of the recovery.” Last year, millions of workers were only temporarily laid off and able to slot back into their previous positions with little delay once reopening began.
Now, employers and workers are “having to make new matches and new connections and that just takes more time,” she said.
Economists also point to a widespread reallocation of labor — like rounds of musical chairs on a mammoth scale — in which workers are re-evaluating their options. During the pandemic, many workers who had held restaurant and retail jobs may have taken positions in warehouses and manufacturing plants.
At the same time, the appetite for pandemic-driven jobs such as couriers and grocery store workers are ebbing as other sectors like leisure and hospitality ramp up.
“Today there are more job openings than before the pandemic and fewer people in the labor force,” said Becky Frankiewicz, president of the staffing company ManpowerGroup North America.
“The core challenge now is enticing workers back to the work force,” she said.
Governors in 26 states have moved to end distribution of federal pandemic-related jobless benefits even though they are funded until September, arguing that the assistance — including a $300 weekly supplement — was discouraging people from returning to work.
The June figures won’t reflect the cutoff’s impact on hiring since the Labor Department’s surveys of establishments and households were done the week that ended June 12, before any states halted federal benefits.
The online job site Indeed surveyed 5,000 people in and out of the labor force and found that child care responsibilities, health concerns, vaccination rates and a financial cushion — from savings or public assistance — had all affected the number of people looking for work. While many employers are desperate to hire, only 10 percent of workers surveyed said they were urgently seeking a job.
And even among that group, 20 percent said they didn’t want to take a position immediately.
Analysts expect that the largest payroll gains will be in the leisure and hospitality sectors, which were also the hardest hit during the pandemic.
They also cautioned that the Labor Department’s estimates could be affected by seasonal adjustments. For example, there is normally a large drop in the number of teachers when schools let out for the summer. Accounting for that traditional decline, though, may be complicated by the fact that not as many educators were working because of pandemic-related school closings.
