This Friday, the Bureau of Labor Statistics (BLS) will release the February jobs report. Jobs growth is likely to remain steady as the Omicron wave continues to recede. The January jobs report showed that the job market can continue to grow despite COVID waves, but after such large revisions in January, another steady jobs report this month would provide more confidence in the durability of job gains moving forward.
Here are three trends we’ll be watching for in the February jobs report:
- Jobs growth steady: Job gains are likely to remain slightly lower than 2021 peaks, similar to January’s 467,000 jobs added. January’s jobs report surprised to the upside, showing that even amidst the pandemic, the labor market is continuing to add jobs.
- Unemployment rate ticks down: The unemployment rate is likely to tick down to 3.9 percent in February, slightly below the 4.0 percent reported in January. While the Omicron wave is receding, high levels of cases are likely to mute strong labor force or employment gains.
- Wage growth up slightly: Wage growth is likely to pick up modestly as competition for labor continues to push employers to raise wages.
Will Omicron show up in the February jobs report?
The January jobs report surprised forecasters in how small the impact of Omicron appeared to be. Friday’s jobs report will help reveal whether the relatively steady job gains in January were a fluke or a sign of resilience.
Omicron was still enormously disruptive for workers and businesses alike in February. The Census Bureau’s Household Pulse Survey revealed almost 7.8 million Americans not working in early February due to being sick with COVID symptoms or caring for someone sick. While this is a decline of 1 million from January’s record highs, it nevertheless remains an exceptionally high level.
Even if overall payroll growth is not significantly slowed by Omicron, millions of American workers being sick or unavailable for work undoubtedly has an impact on those workers’ incomes and on the employers that rely on them.
Inflation concerns remain top of mind
Inflation concerns remain top of mind in 2022 and that’s bleeding into conversations between employees and their employers. Employee discussions of “inflation” on Glassdoor rose 612 percent year-over-year in February 2022 month-to-date. As employers continue to compete fiercely for talent and employees increasingly demand higher raises to keep up with inflation, wage growth will likely remain high in 2022.
With the Federal Reserve widely expected to start raising interest rates at its mid-March meeting, the question is whether inflation can be contained, especially if pandemic-related drivers of inflation persist. The conflict in Ukraine also risks contributing further to inflation by raising energy prices and disrupting already-strained supply chains. The Federal Reserve has little influence over supply chains or foreign policy, muting its ability to address inflation in a targeted and precise manner.
The surprising January jobs report showed that the labor market recovery is much more resistant to the ebbs and flows of the pandemic than previously thought. If the February jobs report continues to show steady improvement despite Omicron, it will further demonstrate that the labor market can continue to grow despite the pandemic’s headwinds. Even as uncertainty from the pandemic, inflation and Ukraine crisis continue to cast a pall over the recovery, a solid jobs report would help build confidence in the strength and durability of the labor market recovery.