MNI REALITY CHECK: US July Hiring Unchecked By Covid Surge

The pace of hiring in July improved just slightly over June as business optimism increased despite a fresh spike of Covid-19 infections tied to the spread of the Delta variant and renewed mask mandates in some parts of the country, recruiters and industry experts told MNI, although noting a shortage of available workers and continued upward pressure on wages are still slowing growth.

"This recovery is in full swing," said Tom Gimbel, founder and CEO of the LaSalle Network, adding that his staffing businesses in July set a new record for 2021. "We saw an increase in temporary staffing orders and permanent position orders that were up over 100% over a year ago and up over 20% over 2019."

Hiring through the month was most concentrated in positions like sales, Gimbel said, a leading indicator that companies are optimistic about the longer-term outlook even as the highly infectious Delta variant of Covid-19 spreads.

"Employers are very confident that there will not be a shutdown," he said. "They're not worried about businesses being shut down and they've shown that people can work from home. They feel very confident that business will remain as usual with or without the Delta variant."

PRODUCTION HIRING DOWN

Other experts weren't as optimistic about the pace of hiring through July. Nick Bunker, an economist at online jobs marketplace Indeed, said demand for workers continues to be strong, "but the pace of improvement is slowing down." However, jobs posted on Indeed through the end of July were still up 35% over February 2020, he noted.

"A lot of the slowdown over the last month or so in job postings has been concentrated in goods producing and goods moving sectors," he said, and demand for workers in industries like construction and manufacturing is waning. That's likely tied to ongoing supply issues that have capped production and reduced demand for workers, he said.

Rising costs of things like building materials mean some employers can't afford to bring on new staff, he added.

WAGES STILL RISING

Wage growth in some sectors may have plateaued as employers raised wages through the summer and are "less likely to raise them more in the short-term," Bunker said, but wages still have room to grow in sectors like leisure and hospitality, where demand for workers is particularly high (MNI INTERVIEW: Shortages More Worrisome Than Delta -ISM Svcs Aug 4).

"There are some areas where the opportunity for wage growth is quite strong," he noted. However, growth could subside in coming months as individuals sitting out a return to the workforce and the "urgency mismatch" between employers and workers dissipates, lessening competition for labor.

But for now, that mismatch continues to weigh on businesses looking to increase staffing levels, with more than half of employers in the Jacksonville, Fla. area expressing a desire to hire through July, and only about 20% of job seekers actively looking for work, said Mike Brady, a franchise owner of recruiting firm Express Employment Professionals in Florida.

"There's still very large demand from clients [for workers], and still shortages," he said, adding that positions in driving, landscaping, construction, and manufacturing were particularly difficult to fill through the month, even when hourly wages offered were well-above minimum wage.

Total nonfarm payrolls are expected to increase by 870,000 in July, according to Bloomberg, just slightly higher than June's 850,000 gain. Forecasts on the upper end predict an increase of more than 1.2 million, though the majority of economists surveyed by Bloomberg see much smaller gains. A closely watched St. Louis Fed model projected an increase of 850,000 jobs, leaving some room for a downside surprise as the index has overpredicted employment growth in recent months.

The unemployment rate should fall to 5.7% in July from 5.9% in June, according to Bloomberg. Hourly earnings are expected to increase 0.3%, the same as June, and should grow 3.9% from a year earlier.