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Industry insiders point to leading indicators suggesting jobs growth could again disappoint in February
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U.S. payrolls growth likely rebounded in February after a weaker-than-expected January, though the rate of monthly job growth still isn't anywhere near where it needs to be for a speedy labor market recovery, recruiters and industry experts told MNI.
The labor market in February improved solidly over January, said Julia Pollak, a labor economist at online jobs marketplace ZipRecruiter, although she warns Friday's report from the Bureau of Labor Statistics is set to disappoint again.
Movement in job postings in one month typically indicate movement in hiring and employment levels the following month, Pollak said, and job postings on ZipRecruiter were "essentially flat" between December and January, indicating that February's job gains were likely "a little bit disappointing." That said, job postings "exploded" in February, up 18% between January and February and by more than 15% from one year ago, she said, citing internal data.
"That's a pretty strong signal that hiring is going to pick up in March and we should see better jobs reports in the coming months," she said, but "we are probably going to see a pretty weak number for February itself."
Even if Pollak's forecast of 150,000 to 200,000 jobs added in February were realized, that would still mean the economy is adding fewer jobs per month than it was on average before the pandemic.
"The normal kind of hiring rates and separation rates that we're seeing now are not something consistent with a robust recovery yet," she said. "If we get a number that's like 200,000, we're still in a 9.9 million deep jobs hole, which is deeper than even the trough of the Great Recession."
"That's not really something to write home about," she added, and the labor market would have to add roughly 1 million jobs each month to stave off a years-long recovery.
Economists forecasting more than 200,000 jobs added in February are "overly optimistic," said Tom Gimbel, founder and CEO of the LaSalle Network in Chicago, expecting a gain of closer to 150,000 to 160,000.
"I think the market is really getting good, and I wouldn't be surprised for the April jobs report to be really good like that, but I think February is a little bit too soon," he said, noting that states in the Northeast didn't open fully until the end of last month and the retail spending hasn't yet recovered to pre-pandemic levels.
Gimbel said "necessary" industries, like restaurants and retail, weren't adding enough jobs through February to "get that kind of growth."
Still, the labor market in February did see some solid improvement over January.
"There was definitely some underlying strength in February for main street small businesses," said Frank Fiorille, vice president of risk, compliance, and data analytics at Paychex, a U.S. payroll provider.
Temporary staffing was up through the month, a leading indicator that confidence among small businesses might be growing, he said, though that hasn't quite recovered just yet.
Wages and hours worked also ticked up through the month, he said, referencing Paychex data from roughly 300,000 small businesses across the country. That was driven, at least in part, by more employers asking their current staff to work longer hours rather than hiring more workers.
"They're still probably a little cautious," he said of small business owners. "They want to add another person onto the payrolls, but they may ask people to work some more hours" until they're entirely ready to do so.
Fiorille said growth in construction payrolls in February continued to lead all other industries, while job gains in leisure and hospitality were muted.
Total nonfarm payrolls are expected to grow by 200,000 in February, according to the Bloomberg consensus, up from January's disappointing 49,000 gain. The unemployment rate should hold steady at 6.3%.