MNI REALITY CHECK: November Hiring To See Seasonal Slowdown

Job growth in the U.S. slowed again in November as lower-than-average seasonal hiring in the services industry and rising Covid-19 case counts across the nation again drove workers away from the market, recruiters and industry leaders told MNI. But positive data from alternative sources through the month means there's potential for an upside surprise.

"In terms of what was going on in November, it's mixed messages," said Josh Wright, chief economist at Wrightside Advisors in New York. The U.S. economy is approaching a "perilous moment" where relief programs authorized under the USD2.2 trillion CARES Act are "petering out" and mobility is declining as new Covid-19 cases spike, putting downward pressure on consumer spending.

Initial unemployment insurance claims were also "moving in the wrong direction," growing through most of November, he said, though those numbers haven't been totally accurate during the pandemic, according to a recent Government Accountability Office report.

Other data points to some labor market improvement in November, with activity in both IHS Markit PMIs reaching multi-year highs.

Mixed monthly data means "we're flying blind into a storm," Wright said. That uncertainty is compounded by a fiscal stimulus that has not yet materialized, further clouding the nation's economic outlook.

"We don't know what kind of setup we're going to have and that is so overwhelmingly important," he said.

SEASONAL HIRES

Seasonal hiring this year was curbed mostly by significant reductions in travel, which carried over to other industries like accommodation and food service. Recent survey data suggests that holiday spending should remain at close-to-normal levels, though retail hiring still likely slowed in November as consumers shied away from in-person shopping as virus infections spread faster than ever before.

"We're unlikely to get the usual spikes in leisure and hospitality hiring, and, to a lesser extent, that's true of retail trade as well," Wright said, noting that the seasonally-adjusted data will be the numbers to watch this month.

Still, accelerating online sales this holiday season should have supported seasonal hires in warehouses and call centers through November, said Tom Gimbel, founder and CEO of the LaSalle Network, a Chicago-based staffing company.

"We're just seeing a little bit of a shift" compared to traditional seasonal hiring, he said. There's "a bigger demand in the warehouse as more and more people are shipping things and then a bigger influx in people working in call centers versus working on the retail floor."

WAGES

Surging demand for warehouse workers in particular has caused pay rates for those jobs to increase through the month, said Yvonne Rockwell, an Express Employment Professionals franchise owner in Santa Clarita, Calif.

"I've seen pay rates creeping for sure," she said, and hourly wages for most available jobs in California are no longer at minimum wage as employers are forced to compete with things like extended unemployment insurance benefits.

Hourly earnings are now on average about a dollar more than California's minimum wage, ranging from USD12-15 per hour depending on the county, she said.

Bonuses were also offered through November to combat rampant absenteeism in some sectors as the U.S. struggles to contain the spread of its latest wave of Covid-19, said Tim Fiore, chair of the Institute for Supply Management's monthly manufacturing survey.

"The issue is labor and labor is really driven by the inability to report to work in a safe environment," he said, and suppliers and manufacturers struggled to find workers last month, particularly for more "exposed" jobs like delivery drivers, which tend to be older and more likely to become seriously ill from Covid-19.

The estimated 478,000 increase in the Bloomberg consensus would be the lowest payrolls number since jobs posted negative growth in April, and would be nearly 200,000 less than October's 638,000 gain.