U.S. Hiring Slows Amid Pandemic Resurgence

Recovery in the U.S. labor market has slowed as the number of COVID-19 pandemic cases has surged going into the winter months.

According to the Bureau of Labor Statistics (BLS), a total of 245,000 jobs were added to payrolls in November, well below economists’ expectations of about 460,000 jobs and also behind October’s revised figure of 610,000. Private-sector employment gains were almost 100,000 jobs greater as the government sector continued with Census-related layoffs.

Tightened restrictions on businesses and public events has slowed the momentum of the employment recovery and will continue to do so for the next several months. While few economists expected a V-shaped recovery, the prospects for a “swoosh-shaped” recovery appear stronger, although the tail may drag out further. In fact, some economists are noting the strength of the stock market and other indicators point to a K-shaped recovery, with high-income workers doing much better than their low-wage counterparts. The expiration of federal aid programs at the end of the year will further exacerbate the situation unless legislation is passed in the near future.

The U3 or “headline” unemployment rate fell to 6.7% in November, a decline of only 20 basis points (bps) from 6.9% in October, and the smallest decrease since the recovery began. Much of the decrease in the unemployment rate can be attributed to a decline in the civilian labor force (CLF) and the number of unemployed workers, as those whose benefits have run out and are no longer counted among the unemployed by the BLS has increased. The weekly total of initial jobless claims fell to 712,000 in the latest release, but a backlog of claims processing could point to a much higher figure than is reported. Economists expect claims to increase along with the pandemic resurgence.

In other November BLS data, annual hourly earnings growth for all employees was 4.4%, even with October’s revised annual increase, but was 110 bps higher than November 2019. The monthly wage figure increased $0.09 between October and November, and was up $1.24 from November 2019, to $29.58. The monthly wage increase for November was on par with that of November 2019, tracking closely to the typical seasonal bump going into the holiday season.

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As mentioned, the CLF declined by about 200,000 workers in November, and the participation rate dipped 20 bps to 61.5%. The CLF participation rate is still down 170 bps from November 2019. The employment-population ratio also declined, by 10 bps from October’s rate to 57.3% in November and is 370 bps below last year’s rate. The total number of unemployed (10.74 million) is about 326,000 fewer than October, but the number of employed workers decreased by 74,000 (in the household survey). The number of people not in the labor force who currently want a job has increased by 448,000 from October to 7.1 million currently.

The number of unemployed workers on temporary layoff continues to fall, from 3.2 million in October to about 2.8 million in November, but the number of permanent job losers increased by 59,000, to more than 3.7 million. Workers that left jobs to look for another opportunity declined by 48,000 from October, as workers become more nervous about the short-term employment outlook. The number of employed part-time workers for economic reasons was little changed from October at 6.7 million, but the number of these workers who could only find part-time work increased by 36,000. The number of part-time workers for noneconomic reasons (in other words, they usually work part-time) decreased from 19.4 million to 18.6 million in November.

The U6 unemployment rate, which includes part-timers for economic reasons and marginally attached workers, fell only 10 bps from 12.1% in October to 12% in November, less than the decrease in the U3 rate. Persons marginally attached to the labor force increased to 2.1 million in November from 1.9 million last month. Persons marginally attached to the labor force are those who currently are neither working nor looking for work but indicate that they want and are available for a job and have looked for work sometime in the past 12 months.

The number of unemployed for less than five weeks was again almost unchanged from the previous month at about 2.5 million. The 5 to 14 weeks category increased by 138,000 but the 15 to 26 weeks category decreased by 760,000 to 1.9 million. The longer-term category of unemployed workers (out of work for 27 weeks or more) increased from 3.6 to 3.9 million workers.

Industry Focus

With the sharp slowing of employment gains as the recovery falters, those industries that had benefitted the most from reopenings over the past few months have also seen the strongest reductions in recovered jobs in November. The Leisure and Hospitality industry saw monthly gains fall by more than 200,000 jobs, while Professional and Business Services’ gains dropped by about 130,000 jobs from the previous month. Still, all but the Government sector gained jobs in November, albeit at lower levels than recently. Further anticipated slowing could result in losses returning to those industries that have already borne the brunt of the pandemic recession.

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• November’s monthly gain in the Trade, Transportation and Utilities industry (121,000 jobs) was heavily dominated by the transportation and warehousing sector (+145,000), particularly couriers and messengers (+81,900) as online retailers gear up delivery drivers for the holiday push. Retail trade contracted by 34,700 jobs as general merchandise stores (-20,800) and electronics stores (-11,300) faced additional restrictions. Wholesale trade added just 10,400 jobs in November, primarily in the durable goods subsector.

• Two-thirds of the Professional and Business Services industry’s gains of 60,000 jobs in November were in the lower-paying temporary help services sector (+40,100) as employers continue to temper their desire for full-time workers. The only other subsector with significant gains was the services to buildings and dwellings (+14,200) category.

• The Education and Health Services industry gained 54,000 jobs in November, but solid gains in the health care and social assistance sector of 59,600 were offset by a loss of 5,700 jobs in educational services. The nursing and other residential care facilities subsectors again lost jobs for the month (-14,100 combined), but doctor’s offices (+20,900) and home health care services (+13,000) posted gains.

• The Leisure and Hospitality industry gained only 31,000 jobs in November, hindered by a loss of 17,400 jobs in food services and drinking places. With increased allowed attendance at NFL and other sporting events, the performing arts and spectator sports subsector gained 21,400 jobs in November, while the amusements, gambling, and recreation subsector gained 18,700 jobs.

• Specialty trade contractor employment grew by 12,900 jobs, with residential contractors adding 14,100 of the Construction industry’s November gain of 27,000 jobs. The construction of buildings sector added 4,900 jobs, with a larger share in nonresidential (+3,600), while heavy and civil engineering construction added 9,500 jobs in November.

• The Manufacturing industry also gained 27,000 jobs in November, with 22,000 of them in durable goods manufacturing, primarily motor vehicles and parts (+17,800). Gains in nondurable goods manufacturing (+5,000) were almost entirely in plastics and rubber products (+4,600).

• The Financial Activities industry (+15,000) spread monthly gains almost evenly between the finance and insurance (+7,300) and real estate and rental and leasing services (+8,300) sectors.

• The Other Services sector had a gain of 7,000 jobs in November, with the largest share of it in the repair and maintenance (+5,400) subsector. Personal and laundry services added 1,100 jobs for the month.

• The Mining and Logging industry posted a monthly gain of 1,000 jobs in November. The subsector of support activities for mining accounted for the bulk of that gain (+800).

• The Information industry also had a modest gain of 1,000 jobs in November, with gains in the motion picture and sound recording (+1,600), broadcasting (+1,200), and other information services (+1,200) subsectors offsetting losses in publishing (-1,300), data processing (-1,000), and telecommunications (-900).

• The Government sector was the lone drag on the economy for the month of November. Losses were again largely due to the release of temporary Census workers from Federal employment (-86,000), as well as local employment (-13,000). State-level government employment was unchanged from last month.