U.S. job growth seen strong as technical factors provide a boost
U.S. job growth likely remained robust in July amid shifts in seasonal employment at schools caused by the pandemic, which could mask some softening in underlying labor market conditions as the boost from fiscal stimulus and the economy’s reopening fades.
The Labor Department’s closely watched employment report on Friday could show nonfarm payrolls surging by at least 1 million last month because of the so-called seasonal adjustment factors, which are also seen inflating employment at auto assembly plants and in the leisure and hospitality sector.
Chip shortages have forced automakers to make changes to their normal production schedules. This could have impacted the timing of the temporary re-tooling shutdowns, which could throw off the model that the government uses to strip out seasonal fluctuations from the payrolls data. The seasonal factors are also expected to have boosted leisure and hospitality jobs.
STRUCTURAL PROBLEM
Job growth this year has ranged between 233,000 and 850,000 per month.
The economy fully recovered in the second quarter the sharp loss in output suffered during the very brief pandemic recession. The unemployment rate is forecast falling to 5.7% from 5.9% in June.
COVID-19 infections are surging across the country, driven by the Delta variant of the coronavirus. While major disruptions to economic activity are not expected, with nearly half of the population fully vaccinated, spiraling cases could keep workers at home and hamper hiring.
Reference: Reuters
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