The monthly job report on Friday offers a more complete picture.
The Department of Labor’s monthly employment report, due Friday, is expected to show employers created about 100,000 jobs in January, a slight rebound after a net loss of 140,000 in December. However, this estimate is very uncertain: Bloomberg’s forecasts range from a loss of 250,000 jobs to a profit of 400,000.
In any case, the report should show that the hiring slowdown that began last fall has continued into the new year. This is worrying because the economy still has nearly 10 million fewer jobs than it did before the pandemic. At the pace of 100,000 additional jobs per month, it would take years to fill the gap.
“That’s a good number in the good times, but at a time when we’ve still lost more than nine million jobs, that’s not rapid progress,” said Nick Bunker, site economist. “We’d have to have an astronomically positive surprise for me to think that we no longer have a slowdown phase.”
Even if the January job posting is better than expected, it may reflect statistical quirks rather than a real improvement in the economy. The numbers are adjusted for normal seasonal patterns such as vacation rentals. However, the pandemic disrupted these patterns, leading to fewer hiring during the holidays and therefore fewer post-holiday layoffs. This could lead to seasonally adjusted earnings appearing artificially strong.
Last week the government reported that the economy grew only 1 percent in the fourth quarter of 2020, a subdued end to a volatile year. Although stronger growth is expected in 2021, most forecasters say the economy will not really move into full recovery mode until after mass vaccination reaches the majority of the population.
“We expect the labor market recovery to be lukewarm in the first quarter,” said IHS Markit’s Deull. “The key is to destroy the virus.”
Ben Casselman contributed to the coverage.
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