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By Anneken Tappe, CNN Business
The recovery in the US labor market is advancing, but concerns about the derailment of Delta Variant progress are rampant. Even though economists anticipate the best gains since last summer in Friday’s jobs report, still high jobless claims and a big mistake in the private sector payroll report put the brakes on the move. excitation.
“The labor market recovery still has legs, but it will likely be an uneven path in the future,” ADP chief economist Nela Richardson told reporters on Wednesday in a call for the press, highlighting variants of Covid-19, labor shortages and supply chain bottlenecks.
It is another story of two healings. On the one hand, the labor market continues to improve as the economy normalizes. Consumer confidence and strong spending are helping to get things back on track.
But at the same time, labor shortages and supply chain disruptions are holding back the recovery in some sectors, especially in hiring.
Last week, the Centers for Disease Control and Prevention updated its guidelines on masks for those who have been vaccinated, and New York City announced that customers and employees at restaurants and gyms will be required to show proof. vaccination. The health of the short-term job recovery will depend on how comfortable consumers and employees feel around others.
“We expect job gains to continue, but we recognize that in the short term there are unprecedented challenges,” said Richardson. “The bottom line is that this recovery is happening, but its path is just something we’ve never seen before.”
For Friday’s jobs report, due at 8:30 a.m. ET, economists polled by Refinitiv predict 870,000 jobs were created in July, a slight downward shift after the forecast broke the 900,000 mark. last week.
Still, that would be an increase from the 850,000 jobs created in June and mark the biggest job increase since August of last year. But the range of expectations is wide. Wall Street banks Goldman Sach and Cit predict an additional 1.15 million jobs, while research firm Action Economics expects 600,000.
The nationwide unemployment rate is expected to be 5.7%.
Not a typical summer
The July report could also be subject to some seasonal quirk, warned Julia Pollak, labor economist at ZipRecruiter.
In normal July, workers in schools and universities take a summer break, which is shown in the data. But this year layoffs in the education sector have likely been far below normal, as many workers were laid off last year due to the pandemic. Meanwhile, other sectors of the economy, such as the service sector, continue to add to the millions of jobs lost in 2020. That could mean seasonal adjustments could skew Friday’s data, Pollak said.
But she is also looking for some improvement in the labor market participation rate, given the recent increase in online job search activity.
That said, Wednesday’s private payroll report from ADP significantly underperformed forecasts. The 330,000 jobs created in July were less than half of what was expected. And even though the ADP report and the number of government jobs are not correlated, the former is considered an indicator for the official figures.
Meanwhile, jobless claims remained stubbornly high throughout the summer. Progressing gradually from week to week, claims remained close to the 400,000 mark. On Thursday, initial benefit claims for the previous week stood at 385,000, seasonally adjusted, little change from the week former.
Even though jobless claims have fallen from their record highs last year, they are consistently above pre-pandemic levels, underscoring the lingering uncertainty in the job market even as companies hire. and that more people are getting vaccinated, Richardson said.
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