US: Latest COVID surge starts to take a toll on the labor market – Wells Fargo

The official US employment report showed numbers below expectations for November. According to analysts at Wells Fargo, the strains of the latest COVID-19 surge are starting to take a toll on the labor market. They point out the 245K new jobs added in November marks a sharp slowdown in hiring and leaves the economy with 9.8 million fewer jobs since February. 

Key Quotes: 

“Hiring slowed sharply in November, with employers adding 245K new jobs compared to 610K in October. Once again, the headline was held down by the layoffs of 93K temporary Census workers. But, the slowdown can be traced entirely to the private sector, where jobs increased 344K after having risen 877K last month.”

“The survey week spanned Nov. 8-14, before many of the latest COVID restrictions and more voluntary efforts to stay at home. A further moderation in hiring is therefore likely in December, with real potential for payrolls to decline outright next month.”

“On the surface, one spot of good news in today’s report was the 0.3% rise in average hourly earnings. However, the pickup was flattered by the weak jobs numbers in retail and leisure & hospitality—the lowest paying sectors. The substantial slack in the jobs market, illustrated more entirely by the employment-population ratio, suggests underlying wage growth will remain restrained for some time.”

“Even with the best seven-month run of job gains on record, employment losses are steeper than at the depth of the Great Recession. That said, there is still reason to believe that the labor market will snap back more quickly this cycle.”

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