Blip?
Or the start of a troubling trend?
On Friday (Jan 8), we saw a disruption in efforts by U.S. businesses to create jobs, months into a global pandemic that, as is well-known, has disrupted Main Street SMBs’ operations.
In terms of the headline numbers reported by the Labor Department (via the Bureau of Labor Statistics), non-farm payrolls dropped by 140,000 jobs – a significant departure from the 50,000 gains that had been expected.
Not the positive end that many had hoped for to a bumpy, dismal 2020.
No surprise: The pandemic continues to hit industries that rely on foot traffic to generate revenues. Of the business verticals most impacted in December, leisure and hospitality companies lost roughly half a million positions in the period, giving up 498,000 positions. Drilling down a bit, food establishments lost 372,000 positions and the hospitality sector lost 24,000 roles. The Bureau reported that overall, the hospitality sector has lost 3.9 million jobs since the start of the year, shedding more than 23 percent of positions.
Looking at the economy as a whole, the data show that 15.8 million persons reported that they had been unable to work because their employer closed or lost business due to the pandemic – that is, they did not work at all or worked fewer hours at some point in the last four weeks due to the pandemic.
“This measure is 1.0 million higher than in November,” according to the report.
Other sectors saw additions to their respective rosters. The BLS data showed that professional and business services saw 161,000 positions added, while retail, in the midst of the all-important holiday shopping season, saw 121,000 jobs added.
The BLS said in its report that in December, both the unemployment rate, at 6.7 percent, and the number of unemployed persons, at 10.7 million, were unchanged.
“Although both measures are much lower than their April highs, they are nearly twice their pre-pandemic levels in February (3.5 percent and 5.7 million, respectively).”
In other words, we are not out of the woods yet – not by a long shot. Coronavirus infections are surging again, and the vaccine rollouts are going more slowly than might have been anticipated. That means companies must stop and start, as lockdowns dot the landscape. That means they don’t have the visibility they need to have any real sense of continuity. And without visibility, at least for certain sectors (like eateries), the hiring landscape is unclear.
But there are at least some indications that despite some bumps – and absent a full-blown rout in the jobs market – we’ll gradually climb out of this troubling spot.
Recent surveys of Main Street SMBs – which are responsible for an estimated 40 percent of the U.S. job market – show optimism about the future. And, as reported, we’re about to see a re-opening of the Paycheck Protection Program (PPP) of forgivable loans as of this month. That might brighten the employment picture in January and beyond.
Earlier in the pandemic, less than half of SMBs surveyed by PYMNTS said they would survive into summer 2022. But recent surveys show a rebound in sentiment, as that number is now 54 percent. Small business formation is at a multi-year high, as estimated by the Census Bureau, which also indicates a sanguine attitude about what’s to come.
One rough jobs report does not a trend make – but it certainly bears watching as we head into a new year.
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