MNI REALITY CHECK:US Dec Job Gains May Slow, But Mask Strength

U.S. payrolls growth likely slowed again in December as new virus shutdowns stalled service-sector employment growth, recruiters and industry leaders told MNI, though Friday's payrolls report could paint an artificially bleak picture of the economy as it fails to account for a new Covid relief package passed at the tailend of the month and continuing struggles for employers trying to hire staff.

Recruiters again struggled throughout December to fill available positions despite high unemployment levels, Mike Brady, an Express Employment Professionals franchise owner in Florida, told MNI.

"The job market is probably the tightest I've seen in the last 10 years," he said. "Pre-pandemic, our unemployment rate in Florida was below 4%, now it's in the mid-sevens but I think it's actually tougher to find people that want to work right now," he said, with many unemployed workers still apprehensive to return to the workplace as Covid-19 infections, hospitalizations and deaths surge.

According to data from an Express survey released early last month, upwards of 19% of the workforce is "scared to death" to go back to work, he said.

Brady said employers through December continued to offer more competitive wages to attract workers, and were often forced to offer hourly pay rates far above Florida's minimum wage of USD8.65 an hour.

"It's very rare that you'll find someone willing to work for less than 12 an hour unless there's overtime offered or perks," he said, noting his business's average hourly pay rate for 2020 grew to USD14.89 from USD13.75 in 2019.

STRONG TEMP MARKET

Others views were more upbeat about December hiring, particularly as the demand for temporary hires continued to surge.

"Business for us was really good, we saw a huge uptick in temporary staffing," said Tom Gimbel, founder and CEO of the LaSalle Network in Chicago, noting that placements in temporary white collar jobs in December increased by more than 15% over November. Permanent placement was also strong through the month, he said.

Gimbel forecast a monthly job gain of around 150,000 in December, noting hiring nationally was likely still strong despite widespread service-sector weakness due to shutdowns in the contact-heavy foodservice and personal care industries because of a seasonal hiring boom among large companies.

"Even if you had more hospitality workers get laid off, you saw Amazon and Target and seasonal hiring come in," he said. "So at the very least I think that would be a wash. My guess is we'll see a positive job-add number."

WEAK SPOTS

But many employers are still hesitant to bring on new staff as the nation's Covid-19 outbreak worsens, said Julia Pollak, a labor economist with online job marketplace ZipRecruiter, and it's not improbable that the labor market could see negative growth for the first time since April.

"I do worry that Friday's result could be a stationary report," she said, and the labor market could either see "small losses or very, very small gains" of roughly 100,000 in either direction when it should ideally be seeing monthly increases of around 2 million jobs.

But that doesn't necessarily spell trouble for the economy moving forward, she said.

"I wouldn't see a negative number as a sign that we are now in a second pullback or a second recession," she said. "I think it's more that the initial recovery is kind of on pause but that it will soon resume again thanks both to the vaccinations and the new fiscal support."

Pollak added that the December jobs report might not be the best indicator of what's to come in the year ahead because it's fairly backward-looking as the new USD900 billion stimulus package wasn't signed into law until the end of the month, long after the reference week in the jobs report.

The estimated 50,000 increase in the Bloomberg consensus would be the lowest payrolls number since jobs posted negative growth in April, and nearly five times smaller than November's 245,000 gain.