The latest figures released by the US Labor Department has seen a steady rise in the number hirings as we approach the end of this quarter. Despite the steady momentum, the figures fall short of the predicted $1 million mark.
Many households are still receiving an additional coronavirus subsidy as a fresh stimulus package is being paid to eligible recipients. Therefore, a large number of people will be reluctant to look for work whilst the subsidy payment is still available. In particular, this applies to low-income wage earners. The number of people looking for work is not keeping up with job growth.
The stimulus has strengthened the economy with consumers now spending on restaurant meals, airline tickets, road trips and new cars and homes. This has seen positive growth in the in the economy but also a sharp rise in the demand for labour.
Experts are concerned that this may lead to a rise in interest rates, as a stronger recovery from Covid-19 would trigger a bout of inflation.
A long way to go
The US economy still has a long way to go to recover the 22 million jobs lost to the initial round of lockdowns in March and April of 2020. There is more than eight million yet to be recovered.
This current demand for labour hirings has already seen an increase in wages. This is great news for job seekers and the increase in wages will attract more people back to the labour market to meet demand.
Large restaurant chains such as McDonald’s and Chipotle are leading the way and have increased wages. Smaller businesses have started to offer sign-on bonuses in a bid to lure workers back to meet the demand in this sector.
As millions of people start to come out of the coronavirus hibernation, it will create a pent-up demand for job seekers looking for work.
The US is slowly starting to open back up for business. Last month saw an increase in hiring, although the much-anticipated hiring increase was not as expected. Economists reported that this did not meet their forecasted predictions of around 675,000 job openings on the market.
Despite these latest results it did have a positive impact on the unemployment rate which dropped to 5.8% down from 6.1%. The number of unemployed is currently 9.3 million, considerably less compared to this time last year, but still well above the pre-pandemic figure of 5.7 million.
President Biden responded positively to the reported figures and described it as historic progress after the worst crisis to the economy in 100 years.
Most of the hiring increases were in sectors that took the hardest hit during the pandemic – namely hospitality and education. The increase in these sectors is due to easing restrictions as vaccinations continue to be rolled out. This alone increased the number of hirings by 292,000.
The current figures show that the US economic growth is gaining momentum and on the right track towards making a full post-pandemic recovery.