Private Sector Continues to Add Jobs as Overall Growth Moderates
The pace of the recovery continues to moderate.
The election has garnered all the headlines this week, and that might not change for a while. Still, businesses move along as the world continues seeking growth opportunities during the ongoing pandemic. This morning’s report of 638,000 jobs added for the month of October is positive from the sense of hundreds of thousands of U.S. workers finding employment, but the pace will likely continue to slow, especially if virus counts rise. Lockdowns have already started again in Europe, and a second wave in the U.S. could cripple businesses that have survived so far.
Keeping an eye on the bright side, the unemployment rate dropped to 6.9% in October and many occupations, such as architecture and engineering, are already below 4.0% unemployment. The challenge is the U.S. has millions of people in service occupations, such as preparing and serving food, that cannot get back to work until social behaviors are able to return to normal.
The U.S. still has 10.1 million jobs to recover, and LaborIQ® by ThinkWhy projects all the jobs will be recouped by early 2023. The biggest storylines to watch for the remainder of the year are:
- Any changes on the horizon related to the election’s outcome
- Timing, adoption, and number of people who will get a vaccine
- Impacts to industries and locations based on tightening social restrictions to contain the virus
- Stimulus to keep businesses and consumers afloat
(Survey Reference Week October 11-17)
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 in certain industries, geographies or for the whole nation. 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 the following types of businesses will likely remain more robust than for others through the end of 2020:
- Retail (some seasonal)
- Finance and insurance
- Home delivery services
- Grocery stores
- Computer equipment
- Federal government
- Housing construction
- Scientific research and development
As businesses and talent acquisition professionals plan for recovery and growth, LaborIQ by ThinkWhy advises to:
- Target cost-effective locations for remote hiring across the country.
- Keep a pulse on labor market performance, where hiring is increasing, and projected recovery timelines. These markets are where business growth and expansion opportunities exist.
- Recruit workers with transferable skills from underperforming or lagged industries.
- Stay current on market salary demands. Wage growth has remained strong during the pandemic, especially for many skilled labor occupations.
Industry Movement & Recovery
(Survey Reference Week October 11-17)
The LaborIQ® base forecast predicts the labor market to be back to pre-pandemic level by the first half of 2023. Several industries are poised to recover faster, while a few others could lag the 2023 timeframe by up to two years. This projection is based on moderate job growth during this year’s fall and winter seasons, followed by stronger, more sustainable job growth beginning in mid-2021.
Industries expected to return to pre-pandemic employment levels:
- Construction – Based on the National Association of Homebuilders survey in Q3 2020, approximately 13.0% of respondents were planning to buy a home in the next 12 months. That was slightly higher than the figure from Q3 2019 (12.0%), suggesting continued confidence for homebuilders as mortgage rates remain at historic lows.
- Financial Activities – Related to the statement above, lending occupation hiring remains strong due to low interest rates, especially in locations such as Charlotte and Austin. This could be one of the first industries to fully recover all lost jobs.
- Healthcare – As elective and preventive procedures return to normal scheduling, healthcare will remain one of the most in-demand due to an aging baby boomer population. Unemployment rates for healthcare practitioners and technical occupations was just 1.9% in October. Other healthcare support occupations, such as massage and physical therapists, have been more impacted and were at 6.8% unemployment in October.
- Professional and Business – Projected to be the strongest-performing sector by the end of 2022 with technology and other high-skill jobs already experiencing very tight labor supply.
- Manufacturing – Hiring continues as demand for durable goods -- items expected to last at least three years -- has increased, while consumers are spending less on face-to-face services. Supply-chain challenges continue to hamper the industry’s ability to get goods to consumers.
- Trade, Transportation and Utilities – There has been a major shuffle in this industry related to workers within transportation and material moving. Many have moved into the retail sector to help with home delivery services. The major concern is for travel-related transportation between now and the end of the pandemic.
- Government – State and local governments are the concern for this group as the pandemic’s effects could impact them for years. Temporary Census hiring has helped boost the 2020 numbers.
- Mining and Logging – The energy sector has gone through multiple disruptions over the last several years, and slower growth is currently projected as it stabilizes.
- Leisure and Hospitality – This timeline has a lot of potential to change quickly, especially for travel and dining. But, with the virus still not yet under control, businesses in this industry continue to face significant risks.
LaborIQ by ThinkWhy continuously monitors and forecasts labor data at all levels, measuring impact to cities, industries, occupations and businesses across the U.S.