On December 4th local time, the U.S. Department of Labor released data showing that the non-farm employment population in the United States increased by 245,000 in November, which was not as expected by the market.
The unemployment rate fell by 0.2 percentage points to 6.7% month-on-month, but the increase in long-term unemployment highlights that the foundation of the U.S. job market is still fragile.
People from all walks of life, including President-elect Biden, pointed out that the U.S. job market may usher in a “dark winter” as the economic growth slows down in the winter triggered by a new wave of the epidemic and more business lockdown measures are introduced.
Employment growth continues to slow down
Data released by the U.S. Department of Labor on December 4 showed that the non-agricultural employment population increased by 245,000 after the quarterly adjustment in November, which was not as expected by the market of 469,000, far below 610,000 in October. The growth slowed down for the fifth consecutive month, indicating that under the impact of the surge in COVID-19 cases and a series of commercial restrictions. The recovery of the U.S. labor market is losing momentum.
Although the non-farm employment population has been growing positively for seven consecutive months in November, only 12 million jobs lost in the U.S. labor market at the beginning of the outbreak of the epidemic have recovered only 12 million jobs. Daniel Cho, a senior economist at the job site Glassdoor, said that at the rate of employment growth in November, the U.S. job market will not return to pre-epidemic levels until 2024.
“We’ve seen positive job growth, but I think sentiment is still largely negative because we know that the United States is entering a dark winter.” “There’s still a long way to go before we really get the vaccine in hand and get the economy back in full,” said Daniel Cho.
Data from the U.S. Department of Labor also shows that the unemployment rate in the United States fell 0.2 percentage points month-on-month to 6.7% in November. The U.S. Department of Labor believes that the U.S. job market continues to improve, but the pace of recovery has slowed down recently. Among them, the labor participation rate in the United States fell 0.2 percentage points to 61.5% month-on-month, widening the gap from the February level to 1.9 percentage points.
According to the analysis of The Wall Street Journal, the data shows that the U.S. labor market is still “scarred”, people face more childcare responsibilities, and limited job opportunities. Many people have completely given up the idea of looking for jobs during the epidemic. This is mainly reflected in the 61.5% labor participation rate in November, which is still close to the lowest level since the 1970s, although it has recovered from the low in April.
Data from the Department of Labor also show that the number of unemployed in the United States continued to decline to 10.7 million in November, still 4.9 million higher than the level in February. The number of long-term unemployed who have been unemployed for more than 27 weeks increased by 385,000 to 3.9 million month-on-month, accounting for 36.9% of the unemployed, highlighting that the base of the U.S. job market is still fragile.
Analysts believe that with the second spike in confirmed cases of the coronavirus and the slowdown in corporate recruitment, it is not surprising that the growth rate of employment in the United States has reached its lowest level since May. In the future, as more employees are unable to go to work due to concerns about the epidemic and family care, the number of available employees will continue to decline, which will further limit the recovery of the job market.
Holidays can’t boost physical store employment
Data released by the U.S. Department of Labor on December 4 also shows that U.S. employers increased jobs in the transportation and storage industry in November, which may reflect the increase in e-commerce jobs driven by the holiday consumption season, while government jobs decreased by nearly 100,000, mainly reflecting the temporary after the 2020 census. The number of workers has decreased; in addition, there has been a decrease in retail employment, including physical stores.
The latest employment report highlights the increasing role of e-commerce hiring during the holiday spending season, with more consumers choosing to order gifts online rather than physically shop during the pandemic, in which case companies in transportation and storage increased 14.5 in November, according to the analysis of the Wall Street Journal. Ten thousand jobs, while the employment of physical retailers of sports goods, books and audio-visual products has declined.
Becky Frankowitz, president of Marlboro Sachs North America, said: “Holiday recruitment still exists, but it’s not as we know it. In previous years, companies would place workers in jobs such as cashiers, clerks or salespeople in retail stores, but during this holiday consumption season, the vacant positions are concentrated in positions such as delivery drivers and warehouse workers.”
The change in hiring during the holiday consumption season, as reflected in the latest employment report, applies to the end-of-year consumption season. It is expected that the demand for jobs such as cashiers, clerks or salesmen will continue to be sluggish, and instead, the demand for delivery drivers and warehouse workers will increase significantly.
Some analysts predict that Americans’ spending impulses during this period at the end of this year should not be underestimated, especially when separated from relatives and friends, some may seek additional comfort by giving gifts. In addition, many people who still have jobs have more savings this year, so they will have more money at their disposal.
In this case, the spending on durable goods may continue to perform well, because people will spend money on gifts to make life at home better. But some of these expenses may have been advanced. For example, some families may have bought new TV sets in days when they are not going out.
At the same time, service spending is likely to continue to be hit, and the whole family going out to watch movies or sending spa gift certificates does not seem to be as popular as before. In a word, people will continue to spend money in the end of the year consumption season, but it is more difficult to boost job demand in physical retail stores.
Warning from all walks of life “Dark Winter”
It is worth noting that in the beige book released by the Federal Reserve recently, policymakers hinted that the slowdown in winter economic growth caused by the second round of the epidemic is gradually taking shape.
One important change is that businesses are starting to become hesitant in hiring due to the uncertainty of the pandemic, with jobs growing slowing down and unfinished recovery reported almost everywhere.
Many companies say it is becoming more difficult to retain employees, especially female employees, because it is very difficult for them to find childcare institutions and school closures to cope with the epidemic.
Companies in several regions of the United States said they feared that “employment levels would decline throughout the winter” before improving.
U.S. President-elect Biden said that the employment report released on December 4 showed that the economic recovery was stagnating, warning that unless the U.S. Congress immediately passed a new bailout bill, the upcoming “dark winter” would exacerbate this pain.
Interestingly, the data showed that the major stock indexes of the U.S. stock market rose to a record high on December 4 despite the fifth consecutive month of slowing down job growth in the United States. One logic is that the poor performance data raised investors’ expectations for a new round of rescue plan.
In other words, the bad news that the employment situation has worsened may be good news for investors, because it means that if members of Congress continue to do nothing, they will face increasing pressure.