Businesses Beg for Workers
If you have seen the proliferation of help wanted signs, you are not alone. Businesses desperately need workers, according to the latest data from the U.S. Bureau of Labor Statistics.
In July, the number of job openings surged by 749,000 to a fresh record of 10.9 million. The increase this year is nothing short of astounding. We are far above the prior peak set in late 2018, when the jobless rate was below 4%.
Despite the large number of job openings, the U.S. BLS reported a sharp slowdown in hiring last month. Growth in nonfarm payrolls slowed from over 1 million in July to 235,000 in August.
Some analysts blamed the sharp slowdown on the rise in Covid cases. A decline in workers at restaurants and bars suggests that might be the case. But restaurants have been woefully understaffed, which could suggest monthly noise in the data.
April saw a sharp slowdown in payroll growth, too, but it proved to be temporary.
Much has been said about the Delta variant’s impact on the economy.
The Fed’s own Beige Book, which is an anecdotal economic review taken from business contacts around the nation, noted that a slight deceleration in economic activity in July and August was “largely attributable to a pullback in dining out, travel, and tourism.”
But it also highlighted stronger sectors, including “manufacturing, transportation, nonfinancial services, and residential real estate.”
Weekly first-time claims for unemployment benefits fell 35,000 to 310,000 in the week ended September 4.
The decline in layoffs isn’t pointing to an appreciable economic slowdown, as employers are growing increasingly reluctant to lose workers. Unlike the spike in Covid cases late last year, jobless claims have yet to turn higher.
Further, a reading near 300,000 has historically suggested a healthy labor market.
But we are far from a healthy labor market. Nonfarm payrolls remain below the prior peak, and employers are struggling to find workers.
The additional $300/week in jobless benefits from the federal government expired at the beginning of the month for states that still dispensed the cash. Plus, a new school year lessens the need for childcare, which has been difficult to obtain for some families.
That should bring additional workers into the labor force, but it probably won’t affect the data right away.