Jobs Report Likely to Show Slowdown 08/07 06:03
Just how severely has the resurgence of the coronavirus pummeled the U.S.
economy? The jobs report for July being released Friday will provide the
clearest answer yet.
WASHINGTON (AP) -- Just how severely has the resurgence of the coronavirus
pummeled the U.S. economy? The jobs report for July being released Friday will
provide the clearest answer yet.
Economists have forecast that employers added 1.6 million jobs, according to
a survey by data provider FactSet. That would normally be a scintillating gain.
Yet it would still fall far short of June's 4.8 million increase and May's 2.7
million gain. And it would mean that the economy has regained only about 40% of
the jobs that were lost when the pandemic intensified in March and triggered a
deep recession and tens of millions of layoffs.
The unemployment rate is expected to have declined from 11.1% to 10.5%,
which would still exceed the highest rate during the 2008-2009 Great Recession.
Some economists say Friday's report could even show that the nation lost
jobs in July. Others expect the gain to be much larger. The pandemic has so
disrupted the economy that the range of predictions by experts has become much
wider --- and less accurate --- than it typically was before.
The economy cratered in the April-June quarter, shrinking at a nearly 33%
annual rate, as the viral outbreak shut down businesses and consumers pulled
back sharply on dining out, traveling and shopping.
Growth rebounded in May and June. But the viral outbreak re-intensified in
late June, doubling the nation's daily confirmed case count to more than
60,000. Case counts have declined somewhat in recent weeks. Yet the new
outbreaks have forced most states to pause or reverse their re-openings ---
closing bars, discouraging travel and limiting shopping and indoor dining for a
second time, all of which has likely slowed hiring.
Even when the economy does rebound, it's likely to do so, at least
initially, with fewer jobs. Once an economy starts to recover, companies
typically try to derive as much production from their existing employees as
they can before taking the risk of hiring more people.
The Institute for Supply Management reported in two surveys this week that
both manufacturing and service sector companies expanded output and sales
faster in July than in June. Even so, companies in both surveys reported that
they were still cutting jobs.
Some other recent data points to a weak month for hiring. The Census Bureau
has found in weekly experimental surveys that the number of people with jobs
fell 6.7 million in July, which points to a huge drop in the official figures.
In June, the same set of surveys had shown a gain of 5.5 million, close to the
government's official figure.
The Census report isn't adjusted for seasonal trends, though, and many
schools typically cut jobs in the summer, which has led economists to say that
the Census figures might be exaggerating the losses.
Some reports suggest that businesses still added workers in July, albeit at
a slower pace. Kronos, a company that makes work management software for small
companies, said the number of shifts worked at its clients rose just 1% in
July, indicating that some previously laid-off workers are still being
recalled. But that's much smaller than the total gain of 32% in the previous 11
Two bright spots for the economy, though, have been housing and auto sales.
Ultra-low interest rates, produced in part by the Federal Reserve's ultra-low
interest rates, fueled sharp increases in sales of new and existing homes in
June. Lower interest rates have also boosted auto sales, though both home and
auto sales remain below pre-pandemic levels.