US expected to see hiring surge as vaccines resurrect ailing economy
The US government is set to release data Friday that could show huge numbers of workers found new jobs last month, the latest sign Covid-19 vaccines are breathing new life into the economy more than a year after the pandemic caused its worst collapse in a generation.
Analysts are forecasting the Labor Department’s April employment report will show the economy added one million positions and the unemployment rate dropped to 5.8 percent.
Those figures were unthinkable just months ago when hundreds of thousands of people were filing new applications for unemployment benefits each week. It would be the biggest gain since August of last year, which marked the end of the first wave of hiring helped by massive government aid.
“The labor market rebound likely retained its momentum in April as companies continued to hire in response to easing business restrictions and strengthening consumer demand,” Oxford Economics said in an analysis, though they cautioned the rehiring may not be as strong as expected.
Good news came on Thursday when the Labor Department reported that initial claims for jobless aid fell last week to 498,000, seasonally adjusted, a new pandemic low.
And payroll services firm ADP on Wednesday reported the private sector added 742,000 new jobs last month, less than expected but nonetheless an improvement on the 565,000 gain in March.
Yet the pandemic is not over and the Labor Department said nearly 16.2 million people continued to receive some form of unemployment benefits as of mid-April.
But analysts believe the country is set for even stronger employment gains this summer.
Work to be done
State-ordered business restrictions imposed to stop the spread of Covid-19 put tens of millions of people out of work in 2020 and sent the unemployment rate soaring, but less than a year later it dropped to 6.0 percent in March as the economy added 916,000 jobs.
Analysts have attributed the marked improvements to the trillions of dollars in government stimulus spending that has kept small businesses and unemployed workers afloat, as well as broad availability of Covid-19 vaccinations that has allowed states to loosen the restrictions cutting into businesses’ bottom lines.
A survey released this week from financial services firm Kabbage found that 85 percent of small businesses reported being fully open as of March, 51 percent higher than the month prior.
Outplacement firm Challenger, Gray & Christmas reported 22,913 job cuts announced by US-based employers last month, 25 percent fewer than in March and 96.6 percent lower than the all-time high hit in April 2020.
“The good news is that employers are no longer undergoing massive cuts, consumers are beginning to feel safe traveling and spending and the number of job openings is edging higher,” the company’s Senior Vice President Andrew Challenger said.
What’s the bad news?
Yet global supply chains are creaking as the United States and other economies reawaken, causing price increases and shortages for manufacturers and retailers.
Employers also complain of difficulties finding workers, a problem attributed to a number of issues including the continued threat of the virus, lack of public transportation and the closure of schools and childcare centers.
The Federal Reserve said employers especially are finding it difficult to attract low-wage and hourly workers, and economist Joel Naroff predicted the situation would last until extra unemployment payments meant to support laid-off workers expire in September.
Nonetheless, he predicted hiring was set to strengthen in the coming months.
“With most states either already fully reopening or announcing plans to do so by summer, the improvement in the unemployment situation should continue unabated,” Naroff said.
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