We expect an increase of 178,000 in total employment when the Bureau of Labor Statistics releases its first estimate of nonfarm payrolls on Friday, with the unemployment rate holding steady at 3.6%. Before the global public health emergency, hiring was slowing in transport, trade, manufacturing and construction, and we expect that to continue.
We expect an increase of 178,000 in total employment.
Those sectors, along with education, will most likely slow noticeably in growth, and in some cases there will be outright contraction as the supply shock to the labor market becomes evident in the coming months. We have already received anecdotal evidence of layoffs at a number of North American ports as the volume of trade has fallen because of the effective shutting down of Asian supply chains linked to the Chinese economy.
We are following weekly unemployment claims and unemployment insurance far more closely than we are the monthly employment report. This near real-time indicator based on our research implies that policymakers and investors should start getting concerned when initial claims make a sustained move above 242,000, which in our estimation would indicate that the economy is at, or soon will be, experiencing a period of contraction.
The wage picture in February will remain unchanged, and given the supply, demand and financial shocks now working their way through the economy, it is almost certain that wages have peaked for the business cycle. We expect an increase in average hourly earnings of 0.3% for the month and 3% on a year-ago basis.
Because of the supply shock, we are also increasing our focus on hours worked and aggregate hours worked, which are solid leading indicators of household consumption. Total hours worked in February were 34.3 and manufacturing hours worked was 40.4, both unchanged from December. Aggregate hours worked increased by 0.2% on the month.
