Back to Business: Industry Recovery Forecast
The pace of recovery will vary across the nation. Specific U.S. cites will lead the recovery across multiple types of sectors, suggesting stronger local economies in the near term.
Here’s a look at the economic recovery timeline across industries.
Industry Movement & Recovery
March’s jobs report indicates strong job growth in the Leisure and Hospitality, Government and Construction sectors. The job growth in Leisure and Hospitality is no surprise as restrictions are lifting across the country, and with patrons yearning to get back to normal activities.
Keep reading to know when LaborIQ expects to see pre-pandemic employment levels in each major sector.
Construction | February construction spending reversed course, falling 0.8% from the month prior. This slight decline has put a pause on the growth within this sector through then end of 2020 and into January 2021. Private Residential Construction dropped 0.2% from January’s estimate. The slight slowdown has been caused by the delay in builders’ ability to complete or start projects as material shortages and prices soar, causing work to slow. Stalled projects could temporarily slow job growth. The number of homes for sale in which construction had yet to begin has ticked upward since October, meaning builders anticipate a market for these homes but cannot yet begin the work. Based on this, LaborIQ still expects Construction to lead the recovery as the industry will continue to need workers to meet demand.
Financial Activities | Sectors within the lending industry have expanded 4.0 to 6.0% from February 2020, serving a mix of people dealing with financial stress to financing new homes. For example, real estate credit, a subsector of this industry, never lost jobs over the course of the recession. Retention was aided by low mortgage rates and strengthening of the housing market, a trend unlikely to subside in the short term. In 2021, mortgage originations are expected to remain above normal levels. On the other hand, the real estate and rental and leasing sector, which employs 25% of the industry, including offices of real estate agents, automobile leasing and commercial machinery leasing will require a certain level of business operation to resume to drive growth. Overall, with three quarters of the industry maintaining stable employment levels, the Financial Activities industry continues to show resilience during the economic downturn and is expected to be one of the first to fully recover jobs.
Healthcare | New virus cases are causing even more stress for exhausted healthcare providers. The paradox of increasing virus counts and robust vaccination provisions will wear on the industry from both ends. Vaccinations continue to grow, with the CDC now reporting 148 million vaccination doses administered as of March 31. As states continue to expand the eligible population for the vaccination, providers will need to prepare locations and staff, accordingly. LaborIQ reports that Medical and Diagnostic Laboratories is poised for sustaining employment levels, as the industry is already above pre-pandemic levels. Outpatient Care Centers is also set to bounce back. These facilities will serve as vaccination centers and to treat patients schedule delayed procedures, as we have seen in recent months.
Professional and Business Services | Overall, the Professional and Business Services industry is expected to be the strongest-performing sector by the end of 2022, as forecasted by LaborIQ. The industry has done especially well in locations that have benefited from the exodus of talent on the west and east coasts, growing in over 60 metros large and small. LaborIQ recently highlighted the Scientific Research and Development Services sector, which has 4.3% more workers than it did before the pandemic, as high-skilled occupations in this industry have maintained relatively low unemployment rates throughout the recession.
Manufacturing | Given the material shortages across other industries, like construction and durable goods, this industry is squeezed by labor challenges and material inputs, which affects productivity. Recent trade and shipment blocks are likely to exacerbate the problem in the short term. The industry added 53,000 jobs in March according to the BLS; Economic impact of trade delays will soon be quantified which may help provide a gauge on the disruption to the industry, but demand is stable for goods and will keep employment levels at a steady pace.
Trade, Transportation and Utilities | We’re still waiting for estimates on the economic impact of the container ship that recently halted passage through the Suez Canal. This event highlighted the vital role this industry plays. While the sector is relatively close to recouping all lost jobs, a full recovery is pushed out by a combination of factors. Labor shortages have challenged productivity. Businesses are also feeling operational impact from material shortages and having to manage customers’ timeline expectations. The high demand for goods today's climate has Warehousing and Storage, along with Couriers and Messengers, up from pre-pandemic levels. Some of the employment gained in these areas could change direction post-pandemic. Airline transportation remains down 20.1% but the decline in February and March virus counts have ignited more traveling. The recovery for airlines in the sector is still uncertain and will be dependent on consumer confidence that the virus is under control.
Government | The new stimulus package or the American Rescue Plan, passed in March, allocates $350 billion in federal aid to state and local governments. While state tax revenues fell less than many expected, costs continue to mount as some areas prepare for more vaccination eligibility. The impact will vary, but with lingering COVID-19 cases, services will be challenged to return to normal operations. As a result, LaborIQ expects a longer recovery for this industry.
Information | There is one bright spot in this industry – Software Publishers. Given the nature of in-person work requirements and public wariness of crowded venues, there is little surprise at dwindling employment levels. The sector's revenue stream evaporated when social distancing closed production sets. In 2020, box office revenues fell 81.6% from the year prior, according to IMDbPro. In 2021, muted revenue persists and will likely continue until studios can get back to full production, which will lower costs.
Mining and Logging | The U.S. Energy Information Association expects crude oil production to come in under 2020 production (barrels per day) and rise in 2022. Consumption of U.S. liquid fuels is not expected to be back to pre-pandemic levels until 2022. Crude oil cost per barrel dropped recently, adding uncertainty to oil companies that continue to be impacted by low economic activity, revenue losses and cut jobs. Baker Hughes, a provider of weekly survey counts of rigs actively exploring or drilling for oil or natural gas, reported that the number was still off 305 rigs from the week of March 26, 2020. The debate on climate policy will heat up in Washington, D.C., and the future of clean energy jobs will continue to be a hot topic.
- Leisure and Hospitality | Amidst falling virus counts and reduced restrictions, patrons are ready to start spending again. Increasing cases, however, could slow the magnitude of the rebound. More real-time indicators, including Open Table reservation data, still point toward increasing demand. In mid-March, daily traveler throughput at the nation’s airports finally crossed the threshold of more travelers than the same day in 2020 and stood nearly eight times higher on March 30, 2021 than the same day last year. Hotel occupancy jumped to 58.9% for the week ending March 20, according to a recent Hotel News Resource article. All of this points to robust job growth in the industry, once virus cases fall and plateau.
LaborIQ by ThinkWhy reports, forecasts and advises on employment conditions and the impact to jobs, industries and businesses across all U.S. cities.