August Showed Strong Job Gain, But There’s a Bumpy Road Ahead
Job gain remained at a historic level in August with 1.4 million jobs added from the prior month. It was the fourth-highest month of job gain on record, following the previous three months of unprecedented growth from May to July. Still, tens of millions of people remain unemployed, and challenges will persist until COVID-19 is under control.
Looking into the fall, it is hard to envision a major boost to demand for some of the hardest-hit industries. Among other things, September and October are usually known for being major months for conferences, as well as the kickoff for major sports seasons. Given that practically all large, in-person events have been canceled or their capacity significantly limited, there will be more pressure put on travel and other associated industries within local economies.
Airlines, hotels, restaurants and ground transportation received at least some small benefit from loosening restrictions combined with summer travel the past few months, but the changing season will impact the ability to sustain that trajectory, and its trend for job growth could head in a negative direction in the months ahead. Employment in the food services and drinking places subsector, summarized by most as the restaurant and bar industry, was still down 20% in August from the pre-pandemic level. Colder weather in some parts of the country will limit the ability for outdoor seating, which helped add capacity during the warmer months. With an eye toward the end of 2020, holiday travel for families will likely be restrained compared to normal times.
Sources: Bureau of Labor Statistics, LaborIQ by ThinkWhy
(Survey Reference Week August 9-15)
Why It Matters
While we continue to see economic activity toward recovery, until a vaccine is available, there will likely be some bumpy months of growth ahead, whether it be in certain industries, metro locations or for the nation overall. Still, the expectation of a strong rebound on the other side of COVID-19 is the baseline. Until then, look for certain industries to remain much stronger than others. Recruitment for these types of businesses will likely remain more robust than others through the fall: finance and insurance, home delivery services, grocery stores, computer equipment, utilities, federal government, housing construction, and scientific research and development.
As businesses strategically plan for recovery and growth, LaborIQ by ThinkWhy advises to:
- Know talent supply and demand shifts and the accompanying salary demands by market, as you grow or expand operations.
- Keep a pulse on labor market performance and the impact to your location and industry.
- Identify the leading and lagging industries to strategically expand your client base, partnerships or acquisition opportunities, as variances can dramatically impact investment and operational strategies.
- Focus on industry and metro growth performance to identify sales, marketing and business development opportunities.
Industry Movement & Recovery
INDUSTRY RECOVERY TRACKER
The LaborIQ® by ThinkWhy base forecast is for the labor market to be back to its pre-pandemic level by mid-to-late 2023. Several industries are poised to recover even faster, while a few others could lag the 2023 time frame significantly. This projection is based on moderate growth during the upcoming fall and winter seasons, followed by more sustained and strong job growth beginning in mid-2021.
The following list shows when each industry is expected to return to its pre-pandemic employment level, as well as some factors to monitor for its success.
- Construction – Residential home-building and specialty trades will need to carry this sector.
- Financial Activities – It has been impacted the least to this point and will likely be one of the first industries to regain full employment.
- Healthcare – Once elective and preventive procedures return to normal levels, this industry will remain one of the most in-demand in the country due to an aging baby boomer population.
- Professional and Business – This is projected to be the strongest-performing sector by the end of 2022.
- Trade, Transportation and Utilities – Working through the logistics of ramping up airlines and other types of transportation could be the wild card. This forecast will also be reliant on non-grocery retail stores making a comeback as consumer behavior returns to its previous pattern.
- Manufacturing – More jobs shifting back to the U.S. would help achieve this forecast.
- U.S. Average
- Government – State and local governments are the concern for this group as the pandemic’s effects could impact them for years.
- Leisure and Hospitality – This timeline has a lot of potential to move up quickly if the economy is healthy and people return to previous normal social behaviors, especially for travel and dining.
- Mining and Logging – The energy sector has gone through multiple disruptions in the past several years, and slower growth is currently projected as it stabilizes.
ThinkWhy continuously monitors and forecasts labor data at all levels, measuring impact to MSAs, industries, occupations, and businesses across the U.S.