Friday, 08 Jan 2021 01:31 PM MYT
Despite the anticipated weakness in the Labour Department's closely watched employment report today, the economy is unlikely to fall back into recession, with additional pandemic relief approved by the government in late December providing a backstop. More fiscal stimulus is expected. “Job growth has been decelerating, since the easy part of the recovery in the labor market, recalling workers, has mostly run its course,” said Ryan Sweet, a senior economist at Moody's Analytics in West Chester, Pennsylvania. “Surging Covid-19 cases and tighter restrictions to contain the spread of the virus were a heavy weight on the job market in December.”
Companies announced a 18.9 per cent surge in layoffs last month, and a measure of service industry employment contracted. Consumers were also very downbeat in their assessment of the labor market.But any decline in payrolls will likely not mark the start of job losses. Congress last week approved nearly US$900 billion in additional stimulus, which is expected to lift household income and consumer spending.
Payrolls last month were probably held back by job losses in the leisure and hospitality sectors, with most jurisdictions banning indoor dining. Manufacturing and construction industries likely hired more workers to meet strong demand for goods like motor vehicles and houses. That underscores what has come to be known as a K-shaped recovery, where better-paid workers are doing well while lower-paid workers are struggling.