The Bureau of Labor Statistics (BLS) released its monthly Current Employment Statistics (CES) report and Current Population Survey (CPS) for February 2021 on Friday, March 5th. The monthly change in employment given by the CES and the unemployment rate from the CPS are seen as the standard gauges for assessing the health of the U.S. labor market. The results mark 12 months since the Covid-19 economic lockdown and signal the labor market recovery is gaining steam after moving into a lull at the end of 2020. Strong growth should reassert itself as more Covid-19 vaccinations are administered later in 2021.
Employment in the U.S. rose by 379,000 jobs, quite a bit higher than the 273,000 jobs expected in the Geographic Solutions, Inc. (GSI) forecast. However, the forecast still outperformed the WSJ Economist Survey forecast of 210,000 jobs. The lower miss by the GSI forecast was partially due to factoring in the effects of the cold weather and power outages in the Midwest and heartland. January 2021 also experienced a large upward revision from 49,000 to 166,000 new jobs, demonstrating the elevated volatility of employment. The GSI forecast was derived from internal data on job openings, job severances, and the number of applications for unemployment benefits filed on GSI state client sites. The forecast used unemployment claims data from the Department of Labor as an external indicator in the forecast.
The unemployment rate fell to 6.2%, just under the GSI and WSJ forecasts of 6.4% and 6.3%, respectively. The unemployment rate forecast used the same indicators as the employment forecast.
Goods-producing industries established a stronger initial recovery but have experienced job loss both in January and February 2021. The good news is that service-providing jobs, which make up the bulk of the labor market, accelerated in January and February and are set to improve on this momentum later this year.
Job market gains came from a strong performance in the Leisure & Hospitality sector in February that totaled 355,000 new jobs, an encouraging sign for the most beleaguered sector since the onset of the pandemic. Professional & Business Services jobs also provided a significant source of growth, increasing 63,000. After Government was the second-leading job producer in January, it lost more jobs than any other sector (-86,000). Seasonal expectations of state and local hiring in education seem to have fallen short and contributed the most to the fall in employment in the public sector.
Despite Leisure & Hospitality’s upbeat results in February 2021, it has a long way to go before completing its recovery. Its employment remains 20.4% below February 2020, more than twice the remaining percentage of any other major sector.
The U-3 unemployment rate is the standard form of measuring unemployment in the U.S. labor market and includes those that are actively seeking a job but unable to find one. The U-3 unemployment rate declined to 6.2% from the previous month.
The labor force participation rate basically held steady at 61.4% from the previous month. The more expansive U-6 unemployment rate counts discouraged workers who are no longer actively seeking work (and therefore no longer in the labor force) and those that have settled for part-time employment but desire a full-time job. This measure of unemployment remained at 11.1%. The declining U-3 rate along with a sustained or increasing labor force participation rate demonstrates that more unemployed persons are becoming employed.
Overall, the February labor market report indicates that consumers are more comfortable venturing out and resuming some of their pre-pandemic spending habits. We expect for this trend to rapidly increase in the coming months as vaccinations increase and Covid-19 cases decrease. The Biden Administration announced that the U.S. will have enough vaccinations for every adult by the end of May 2021. The hope is that June 2021 employment will return to the more than one million job growth pattern not seen since August 2020.