22 May 2022

Strong Expected Job Growth in April Set to Propel Economy

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Employers likely added jobs at a robust pace for the second straight month in April, signaling a speedy economic recovery from last year's historic downturn.

Economists expect payrolls grew by one million in April after rising by 916,000 in March. They project the unemployment rate fell to 5.8%, down from 6% in March and a record-high 14.8% last April when the pandemic struck.

Higher vaccination rates, fiscal stimulus and easing business restrictions are converging to support an economic boom across the U.S.

"The pieces are really coming together for a burst in activity," said Sarah House, senior economist for Wells Fargo's Corporate and Investment Bank. "We're expecting to see the labor market recovery shift into an even faster gear with the April jobs report."

Gross domestic product, the broadest measure of goods and services made in the U.S., grew at a 6.4% seasonally adjusted annual rate in the first quarter. Economists expect households -- many of them vaccinated and with a recent round of stimulus money -- to further power growth this year by shelling out money on services.

Businesses are seeking workers to meet the surge in spending. Job postings on Indeed, a job-search site, were up 24% by the end of April, compared with February 2020, just before the pandemic took hold in the U.S.

One year ago, the jobless rate skyrocketed to 14.8% -- a record for data tracing back to 1948 -- and payrolls dropped by a historic 20.7 million. Business reopenings last summer helped the economy recoup some of the lost jobs. But the recovery remained incomplete as Covid-19 continued to spread, triggering continued restrictions on businesses and heightened caution among many consumers.

Now vaccinations are allowing the U.S. to contain coronavirus cases, and jobs in sectors with the steepest losses at the onset of the pandemic are starting to return. The number of small-business employees punching in at entertainment firms is now 11% higher than in October 2020, while employment in hospitality, retail and food services are all up around 2%, according to Homebase, a scheduling-software company.

Paul Keeler, owner of two barbecue restaurants and a steakhouse in Arizona, said the businesses are adding workers to meet a surprising upswing in demand. Sales across the three restaurants surged by 17% at the start of this year compared with the beginning of 2019, when he said business was hot.

Many people have traveled to Arizona from nearby states with tighter restrictions such as California, Oregon and Washington, helping boost business, Mr. Keeler said. Others are feeling more confident to dine out because of vaccinations.

"The pent-up demand has been tremendous," Mr. Keeler said. "Because we've been so busy, we've been interviewing and hiring every week."

Regions that suffered more from the pandemic and imposed greater restrictions are showing signs of faster rebounds. For example, Homebase data indicated that small-business employment in Florida has held relatively steady since October 2020, compared with steep climbs in New York and California since January. The number of workers clocking in at New Mexico small businesses is now up nearly 3% from levels seen last autumn.

Heritage Hotels & Resorts has seen a pickup in customer bookings in the last month as New Mexico eases restrictions, said Molly Ryckman, the company's vice president of sales and marketing. Earlier this week, New Mexico officials lifted hotel occupancy restrictions in counties where Heritage operates several boutique hotels. Restrictions were relaxed in the other counties in which it operates a few weeks ago.

Heritage has added hundreds of workers in the last couple of months, though staffing is still less than half of pre-pandemic levels. The company currently has 150 open jobs but is struggling to quickly fill the positions. As a result, it is increasingly looking at candidates without previous hospitality experience, Ms. Ryckman said.

"Especially in a destination like Santa Fe, when you shut down every museum and every restaurant and all of those are reopening at the same time, it makes it a challenge to fully staff and reopen," she said.

Many employers across the U.S. are reporting they can't find enough workers, even though millions of people are unemployed. This phenomenon could restrain economic growth in the coming months.

There are several factors keeping potential workers on the sidelines. Many Americans aren't working for fear of getting or spreading Covid-19. Businesses are reopening ahead of schools, leaving some parents without child care. Some people are receiving more in unemployment benefits than they would earn in the available jobs.

Economists are concerned that the labor-force participation rate, or share of people working or seeking work, will recover slowly. The rate was at 61.5% in March, down from 63.3% in February 2020 before the pandemic hit.

Mercury Marine, a boat-engine manufacturer based in Fond du Lac, Wis., is seeing a strong appetite for its products, said Chris Drees, the manufacturing company's president.

"People have found out boating is an awesome way to social distance and get away a little bit from the lockdowns," Mr. Drees said. "We've seen a real boom in the boating industry this last year, and it looks to continue."

The company plans to add 250 manufacturing employees to its main campus this year. But Fond du Lac's unemployment rate of about 4% is well below the national average, meaning there are relatively few people in the area available to work, Mr. Drees said.

Mercury Marine is ramping up overtime hours so it can make enough engines as it tries to find more workers. But "if we can't get those employees, it will certainly hinder our ability to produce," Mr. Drees said.

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