Did a surge in coronavirus cases and deaths in recent weeks trigger the first drop in U.S. employment in November since the onset of the pandemic last spring? Some economists think so.
A few Wall Street forecasting firms such as Oxford Economics predict an outright decline in jobs, but the majority expect hiring to increase for the seventh month in a row.
The November jobs report, due Friday, might have bigger implications than usual. Congress is weighing whether to approve another huge federal aid package for the unemployed and struggling businesses.
A strong increase in hiring would reduce the urgency for Congress to act, but a weak number could speed up passage or even lead to a bigger spending bill.
Here is what to watch in the November employment report on Friday morning. The government will publish the report at 8:30 a.m. Eastern.
Economists polled by MarketWatch forecast a 438,000 increase in new jobs in November.
If they’re right, it would mark the smallest increase since the U.S. economy reopened from lockdowns in May. The U.S. added 638,000 new jobs in October and 672,000 in September.
Nationwide is at the high end of the forecast, estimating an increase of 748,000 new jobs. Oxford Economics is on the low end of the totem pole, predicting a 60,000 decline.
Congress has been deadlocked for months over another aid package, but a small bipartisan group of senators and House members are trying to get both parties to agree to a nearly $1 trillion stimulus before the end of the year that would extend unemployment benefits for millions of Americans, among other things.
A weak November jobs report could lend more urgency to their efforts.
The official unemployment rate never rose as much as expected early in the pandemic this year and it’s fallen far quicker than anyone would have predicted, but hardly anyone thinks it’s close to accurate.
The jobless rate is forecast to slip to 6.8% in November from 6.9% in the prior month. Before the coronavirus struck in March, the unemployment rate stood near a 50-year low of 3.5%.
What the official measure leaves out, however, are the roughly 4 million people who’ve dropped out of the labor force since February by stopping their job search. They aren’t counted. Nor does it include people who can only find part-time jobs.
Most economists believe the true unemployment rate is several points higher, but as long as it’s declining, it’s still good news. At least 11 million people were classified as unemployed in October.
A flurry of new government restrictions across the country to combat the pandemic are likely to fall most heavily on restaurants, hotels, entertainment venues and other businesses whose access to customers has been limited.
These are among the industries that suffered the most job losses in the spring. Some such as restaurants brought back millions of workers in the summer and early fall, but if the momentum flags significantly enough, it could produce a weak November jobs report.
Manufacturers and construction firms may have also cut back on hiring and employment in November due to the recent surge in coronavirus cases and the inability to find enough skilled workers.
“Labor market conditions are choppy,” said chief economist Robert Dye of Comerica bank in Dallas.
Also watch the number of hours workers put in on the job in the data. If the coronavirus pandemic is having a big negative effect, the length of the workweek could slip from 34.8 hours in October.
Chances of an outright drop in employment aren’t farfetched.
Jobless claims rose early in November to the highest level in more than a month, for one thing. A pair of ISM surveys of business leaders at large companies pointed to weak employment growth. And time-sheet trackers of small and medium-sized firms also noticed a slowdown in November.
A decline in employment might not dampen the optimism of Wall Street (DOW:DJIA) investors, however. They would likely place greater odds on Congress or the Federal Reserve taking fresh steps to revitalize the economy.