The latest jobs numbers are out from the U.S. Bureau of Labor Statistics. What do they mean for job seekers, employers and investors? Here’s a quick take from Glassdoor Senior Economist Daniel Zhao.
Green shoots of economic recovery were apparent in today’s jobs report. The U.S. labor market added 379,000 jobs in February, accelerating from a revised 166,000 increase in January. The engine of economic recovery is restarting as the pandemic’s winter wave recedes, although there is still a long way to go.
Green Shoots of Recovery
Payroll employment rose 379,000 in February pleasantly beating expectations; however, payrolls are still 9.5 million short of pre-crisis levels. The economy would need to add almost 1 million jobs a month for the rest of 2021 to return to pre-crisis levels by the end of the year. That rate of recovery is a tall order at this point in the pandemic, though not completely out of the question once the economy can fully reopen safely.
Goods and Services Industries Both Trend Upward
Service-providing industries like leisure & hospitality (+355,000), health care and social assistance (+45,600) and retail trade (+41,100) saw a strong rebound in February as the winter wave abated. Furthermore, service industries remain ripe for a rebound once the economy fully reopens. Goods-producing industries like manufacturing (+21,000 jobs) and construction (-61,000) performed surprisingly poorly in February despite strong demand for goods and housing.
Temporary Layoffs Fall as Winter Wave Recedes
Temporary layoffs fell to 2.2 million in February from 2.7 million in January as the public health situation improved and businesses recalled furloughed workers. Permanent job losers were unchanged at 3.5 million, a concerning sign as the level of permanent layoffs has held above 3 million since August. Post-pandemic, it remains to be seen how many furloughed workers will be recalled and how quickly permanently laid off workers will be pulled back into the labor force.
Employment Recovers for Hispanic & Asian Workers
Employment for Hispanic and Asian workers improved in February after declining during the winter wave. Hispanic and Asian workers are disproportionately represented in service industries that have been hit hard by the pandemic. The employment-population ratio declined for Black workers, leaving it 5.1 percentage points below pre-crisis levels.
While the February report’s pace would be considered above average pre-pandemic, it feels marred by the deep 9.5 million job hole that remains in the middle of the economy. This sluggishness is ultimately temporary as more widely-available vaccines clear a path to a stronger recovery by the latter part of 2021. The pending relief bill is also intended to provide a bridge for Americans through to the full reopening of the economy. The finish line for the pandemic is in sight, but we need to make sure we finish strong.
Payrolls added 379,000 jobs in February, though they remain 9.5 million below pre-crisis levels. 379,000 jobs added would be a healthy pace pre-pandemic, but we would need to add nearly 1 million jobs per month for the rest of 2021 in order to get back to pre-crisis levels by the end of the year.
The improvement in payrolls was almost entirely driven by a rebound in leisure & hospitality (+355,000 jobs added) as businesses reopened following the winter wave. While it’s important that these businesses reopened, it signals that job gains in this report were more about reopening rather than new growth.
Looking at the long-term trend, leisure and hospitality is still climbing out of the hole from the pandemic’s winter wave. State & local government job losses are continuing and employment in those industries are still near crisis lows. Job gains in goods-producing industries like construction and manufacturing were surprisingly weak despite surging demand for goods and housing.
The unemployment rate fell slightly to 6.2 percent from 6.3 percent in Jan. The unemployment rate is making steady improvement, but remember: it doesn’t capture all labor market slack, especially during a pandemic. For example, the labor force level is still 5.5 million below last February because of the pandemic, an issue that is not easily captured in the unemployment rate.
Most of the drop in the unemployment rate was driven by a decline in temporary layoffs from 2.7 million to 2.2 million. Permanent layoffs were unchanged at 3.5 million. While permanent layoffs haven’t accelerated, they’ve still held over the 3 million mark since August.
The employment-population ratios for Hispanic and Asian workers improved in February as the service industries that they’re disproportionately employed in recovered. The Black employment-population ratio, however, dropped, pointing to a weaker recovery for Black workers.
The jobs report may have been affected by the severe winter weather in mid-February that fell during the reference week. This may have lowered response rates, but the trend is also visible in “bad weather” measures from the jobs report. The number of workers who were part-time due to bad weather increased from 382,000 to 1,878,000 and the number absent due to bad weather increased from 176,000 to 897,000