November Jobs Report Preview: Delta Slowdown Lingers in Job Market
Daniel Zhao
Chief Economist at Glassdoor | Dec 1, 2021
This Friday, the Bureau of Labor Statistics will release the November jobs report, showing a labor market at an inflection point. While job gains rebounded in October, further acceleration is likely to remain muted as long as the latest COVID-19 wave lingers. But hot labor demand is likely to keep November job gains high and near October levels. While 2021's penultimate jobs report will likely show that the Delta slowdown is not fully in the rearview mirror, the path ahead remains uncertain as concerns about the Omicron variant emerge.
In November's jobs report, I'll be watching for four things:
- Little growth in payroll gains: Growth in payroll gains is likely to remain flat, slightly above half a million jobs added and near the 531,000 jobs added in October. Stalling improvement in the public health situation is likely to stifle acceleration in payroll growth.
- Modest decline in unemployment: The unemployment rate is likely to decline, falling to 4.5 percent from 4.6 percent in October. Labor force participation is likely to remain the same or increase slightly to 61.7 percent as employers struggle to attract workers off the sidelines.
- Strong holiday season bumps hiring: Strong consumer spending this holiday season is likely to support strong hiring in retail and transportation and warehousing. Temporary help services may also see a bump as short-staffed employers turn to temp workers.
- Industries with question marks: Leisure & hospitality and education are two question marks ahead of the report. Leisure and hospitality has driven jobs growth over much of the recovery. However, it's unclear whether jobs growth will remain strong in November as the weather turns and travel slows down. And, while the seasonal adjustment has resulted in education job losses in the last few months, that may finally normalize in November, removing some downward pressure on payroll gains.
When the Pandemic Worsens, the Recovery Slows
With the Delta variant wave still weighing on the economy and the risk of the new Omicron variant on the horizon, it's worth reiterating that the pandemic controls our economic destiny. If the public health situation deteriorates significantly, the economy is also likely to take a turn for the worse.
Over the last year, each wave of the pandemic has triggered a slowdown in the labor market recovery. In the graph below, cases (dark blue) and hospitalizations (teal) have increased in three waves in late-2020, spring 2021 and fall 2021 and each time, jobs growth (purple, inverted) has slowed.
COVID-19 cases and hospitalizations have fallen between the October and November jobs report reference weeks, but the improvement is significantly slower than from September to October. This lack of significant improvement is likely to crimp any November acceleration in job gains. The chart below shows the correlation between new daily cases and payroll gains: Between September 2020 and October 2021, when the daily new case rate increased by 1, there were about 4 fewer job gains. Although this estimate should not be interpreted precisely because of the complexity of the relationship, this nevertheless provides illustrative evidence of the relationship between the worsening of the pandemic and weakening of the labor market.
The strong correlation between the pandemic and the labor market recovery is in part because the largest remaining jobs shortfalls are still in COVID-sensitive industries like leisure and hospitality, education and health care. In particular, leisure and hospitality, education and health care account for 65 percent of the remaining jobs shortfall relative to pre-pandemic levels.
Conclusion
The November jobs report sits at an important inflection point in the recovery. The new Omicron variant is sparking concerns that we could face another severe pandemic wave, similar to the one caused by the Delta variant. Even without Omicron, the Delta variant wave is persisting in the U.S. longer than expected, is even showing signs of worsening, and remains a threat to the recovery. The pandemic is not over, and we can't expect a steady and complete recovery until the pandemic is under control.
Daniel Zhao
Daniel Zhao is Chief Economist at Glassdoor. On Glassdoor's Economic Research team, he has conducted research using Glassdoor's unique data on a variety of topics affecting job seekers and employers ranging from the health of the job market to pay transparency to employee engagement & retention. His work has been cited in publications like the New York Times, the Harvard Business Review and more. Prior to joining the Economic Research team, he also worked on improving the user experience for Glassdoor’s consumer jobs product and mobile app. He holds a bachelor's degree in applied mathematics and economics from Harvard College.
Tags:Labor Market
