REPEAT: REALITY CHECK: US Employers Cautious Amid Outbreak

By Brooke Migdon

     WASHINGTON (MNI) - The U.S. nonfarm payrolls report due Friday likely masks

the magnitude of labor market disruptions as the coronavirus spread across the

country toward the end of the month, U.S. recruiters and HR service providers

and told MNI.

     Overall hiring in February likely slowed to 175,000 from January's

blockbuster 225,000 gain in the Bureau of Labor Statistics' report, according to

median market expectations. However, the Labor report is based on data collected

through Feb. 15 when known U.S. cases of Covid-19 were still limited to those

who traveled to affected countries.

     Recruiters interviewed by MNI saw a more marked deterioration in what was

expected to be a manufacturing rebound, somewhat offset by a ramp-up of hiring

in the health care sector, and an overall trend toward caution.

     The U.S. manufacturing sector, one of the most trade-sensitive industries,

likely got its "legs pulled out from underneath it" last month as it was forced

to quickly respond to disruptions in global supply chains, said Josh Wright,

chief economist at iCIMS Inc., a recruitment software company headquartered in

New Jersey. Overall hires were down 1.4% and job openings were down 3.1%,

according to iCIMS' own measure, which uses data from the entire month. 

     That job openings rose slightly less robustly through the month was a clear

sign that employers may be scaling back some operations just as the coronavirus

began spreading across the U.S., though they still maintained a mostly

optimistic outlook.

     "They're not canceling all the plans, but they may be a little bit more

tentative," Wright said Wednesday in an interview. That sentiment is expected to

evolve quickly this month as local governments launch emergency measures and

close public gathering places.

     Manufacturing saw a 3.4% increase in job openings led by demand for

production support roles like sanitation, likely due to hygiene concerns,

according to iCIMS data.

     Business are likely to "stay on the sidelines" and practice caution in

hiring in February and March as the virus' long-term effects on client demand

and supply of raw materials sourced from Asia are uncertain, said Reid Bates of

Express Employment Professionals in Washington state, the location of all 11

coronavirus-related deaths in the United States.

     "Long term, I would expect a lot of companies will need to reassess their

dependence upon foreign suppliers in light of the virus," he said Thursday in an

email, adding this could potentially boost domestic production in the U.S. in

the near future.

     Bates said companies sourcing from and exporting to China, where the novel

coronavirus originated, have not only temporarily put their hiring plans on

hold, but have also been forced to furlough their permanent workers in some

cases.

     Still, few effects from the virus will be visible in Friday's report

because the BLS's survey-week methodology only includes the first half of the

month. Private payrolls likely declined in February, with Bloomberg's median

estimate calling for a 160,000 gain following a 206,000 increase in January, but

should still support headline job growth. Wednesday's ADP report saw private

sector jobs rising by 183,000 in February. Service sector jobs are likely to add

a similar boost, with the Institute for Supply Management's own measure of

non-manufacturing employment hitting a seven-month high in February.

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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