We expect a total increase in employment of 105,000 jobs for February with the unemployment rate holding steady at 6.3% when the Labor Department releases its monthly data on Friday.
The primary narrative for the month will be the contrast between the true level of unemployment in the economy and the official data. Our estimate of the unemployment rate that accounts for the effects of the pandemic holds at 7.3%, but once we adjust that figure for those who have left the workforce, it is at 10.2%.
In addition, the widely followed U-6 estimate, known as the underemployment rate which includes discouraged workers and those who are employed part-time but want full-time work, stands at 11.1%.
This will surely play into the debate in Washington on the size and scale of the $1.9 trillion American Rescue Plan put forward by the Biden administration.
We anticipate a modest easing in hours worked and a gain of 0.1% in average hourly earnings as inclement winter weather dampened prospects for improved financial household conditions excluding government transfers.
We base this forecast on volatility in top-line jobless claims easing in the Institute for Supply Management’s sentiment surveys for the manufacturing and service sectors, as well as on the increase in the 10-year yield.
This would represent the third straight disappointing monthly jobs estimate from the BLS as a result of what we all hope is the final wave of the once-in-a-century pandemic. But as vaccines become more widespread, we anticipate that policymakers, investors and firm managers should expect a significant acceleration in the pace of hiring as service sector workers are recalled to their jobs.
We anticipate that roughly 7.5 million jobs will be added to the tally when all is said and done this year, which translates to an average of 625,000 per month. That will result in some months in the second half of the year where job gains will be pushing 1 million as the economy reopens.
Any strength in the February jobs data will almost surely be in the business services, education and health care sectors as well as in financial services and information. We also expect a rebound in transport following the decline of 50,000 jobs in January as port activity has picked up noticeably despite supply chain and transportation bottlenecks.
For more information on how the coronavirus pandemic is affecting midsize businesses, please visit the RSM Coronavirus Resource Center.
