Why January's jobs report may disappoint and perplex for sure

The January jobs report comes at a critical time for the US economy. Inflation is on the rise. The pandemic continues to wreak havoc. ...


The January jobs report comes at a critical time for the US economy. Inflation is on the rise. The pandemic continues to wreak havoc. And the Federal Reserve is trying to decide how best to steer the economy through a whirlwind of competing threats.

Unfortunately, the data, which the Department of Labor will release on Friday, is unlikely to provide a clear guide.

A host of measurement issues and data quirks will make it difficult to gauge exactly how the latest wave of coronavirus has affected workers and businesses, or assess the underlying health of the labor market.

“It’s going to be a mess,” said Skanda Amarnath, executive director of Employment America, a research group.

Data for the report was collected in mid-January, near the peak of the wave of cases associated with the Omicron variant. There is no doubt that the surge in cases has been disruptive: A Census Bureau survey estimated that more than 14 million people in late December and early January were not working either because they had Covid-19 or because they cared for someone who did, more than at any other time during the pandemic.

But the exact impact of these disruptions on job numbers is less certain. Forecasters polled by Bloomberg expect the report to show employers added 150,000 jobs in January, slightly less than the 199,000 added in December. But there is an unusually wide range of estimates, from a gain of 250,000 jobs to a loss of 400,000.

The Biden administration and its allies brace for a grim report, warning on Twitter and in conversations with reporters that a low job count in January would not necessarily be a sign of a lasting slowdown.

Economists generally agree. Coronavirus cases have already started to drop across most of the country, and there is little evidence so far that the latest wave has caused lasting economic damage. Layoffs have not increased as they did earlier in the pandemic, and employers continue to publish job offers.

“You might have the option of a payroll number that looks really, really awful, but you’re pulling on a rubber band,” said Nick Bunker, director of economics research for jobs site Indeed. “Things could rebound very quickly.”

Still, the January data will be unusually confusing as Omicron’s impact will affect different details in different ways.

The number that usually gets the most attention, the number of jobs won or lost, is based on a government survey that asks thousands of employers how many employees they have on their payroll during a given pay period. People who miss work — because they are sick, are quarantined due to exposure to the coronavirus, or are caring for children because their childcare arrangements have changed — might not not be counted, even if they have not lost their jobs.

Predicting the impact of these absences on the number of jobs is tricky. The payroll figure is meant to include anyone who has worked even a single hour during a pay period, so people who only miss a few days of work will still be counted. Employees taking paid time off also count. Still, the magnitude of the Omicron wave means absences are almost certain to wreak havoc.

The employment report also includes data from a separate household survey. This survey considers people to be “employed” if they say they have a job, even if they are sick or absent for other reasons. The different definitions mean the report could send mixed signals, with one measure showing an increase in jobs and the other a decrease.

Economists generally pay more attention to the enterprise survey, which is larger and considered more reliable. But some say they will pay more attention than usual to household survey data this month, as it will better distinguish temporary absences from more lasting effects of Omicron, such as layoffs. or postponed extensions.

But economists have also warned not to downplay the impact even temporary absences from work could have on families and the economy, especially now that the government is no longer offering extended unemployment benefits and unemployment benefits. other aids.

“There aren’t as many Covid relief funds anymore, so absences from work may actually reflect a significant drop in income,” said Julia Pollak, chief economist at job site ZipRecruiter.

Even in normal times, January employment data can be difficult to interpret. Retailers, shippers and other businesses lay off hundreds of thousands of temporary workers hired over the holiday season each year. Government statisticians adjust the data to account for these seasonal patterns, but this process is imperfect. January is also the month each year that the Labor Department incorporates long-term revisions and other updates to its estimates.

“January is a messy month,” Mr Amarnath said.

This year it could be even more complicated as the pandemic has disrupted normal seasonal patterns. Labor shortages have led some companies to hire permanent workers instead of short-term seasonal help during holidays; others may have withheld temporary workers longer than expected to cover employees who were sick. If this results in fewer layoffs than usual, the government’s seasonal adjustment formula will interpret this job retention as an increase.

Other figures could also be misleading. The unemployment rate, for example, could fall even if hiring slows. This is because the government only considers people unemployed if they are actively looking for work, and the spike in Covid cases may have led some to put their job searches on hold.

Data on average hourly earnings could also be skewed because it is based on payroll data – people who are not on the payroll are not counted in the average at all. Low-wage workers were likely the most likely to be off payrolls last month, as high-wage workers are more likely to have access to paid sick leave. That could lead to an artificial — and temporary — rise in average earnings as Fed policymakers monitor payroll data for clues about inflation.



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Newsrust - US Top News: Why January's jobs report may disappoint and perplex for sure
Why January's jobs report may disappoint and perplex for sure
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