Thursday, November 12, 2020
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Layoffs hit a record low in September. But permanent job losers are skyrocketing.
The long-term damage inflicted on the labor market during the COVID-19 pandemic is starting to make itself known.
Last Friday, the October jobs report came in better than expected.
Some 638,000 jobs were added back to the economy with the unemployment rate falling to 6.9%. And this drop in the unemployment rate came, encouragingly, as labor force participation rose 0.3% from the prior month.
But October also saw the number of permanent job losers eclipse those on a temporary layoff for the first time since this crisis began, with 3.7 million workers declaring themselves permanently unemployed while 3.4 million see themselves temporarily unemployed. In June, there were 2.89 million permanently unemployed workers. Last October, there were just 1.26 million.
And permanent job losers as a percentage of the total unemployed population continues to rocket higher, hitting 33% in October, the highest level since February 2013. In April, when the majority of folks out of work were furloughed or temporarily laid off, this percentage fell to less than 9% of the unemployed population.
The Job Openings and Labor Turnover Survey, or JOLTS report, for September published Tuesday also showed that overall dynamism in the labor market is declining as well.
Overall job openings remains subdued, totaling 6.44 million in September and down almost a million open jobs from the record levels seen in late 2018 and early 2019.
Meanwhile, the number of workers quitting their jobs — seen as a key sign of worker confidence — ticked higher in September to just over 3 million, but in July 2019 more than 3.6 million workers quit.
And this ossification of the labor market just a few months into an economic rebound that follows the unprecedented forced shutdown is concerning as COVID-19 cases continue to rise around the country.
Especially as lawmakers across the country take action to restrict economic activity in an effort to contain the spread of the virus, as seen in New York on Wednesday.
“The fact that there was not much change in the latest data from JOLTS is a bad sign for this labor market recovery,” Nick Bunker, director of research at the Indeed Hiring Lab, said in an email this week.
“The number of job openings didn’t really change from the month before. The quits rate, a sign of worker confidence, was also very similar to the prior month. For signs of a strong labor market recovery, both of these numbers need to rise. That is not what we are seeing.
The number of layoffs in September did, however, fall to a record low of 1.33 million. Though as JPMorgan economist Daniel Silver noted Tuesday, flows data from the latest jobs report and initial claims suggest this number understates the number of layoffs.
Later this morning, at 8:30 a.m. ET we’ll get the latest weekly report on initial jobless claims. This report has consistently been the most discouraging piece of economic data throughout the pandemic.
Last week, continuing jobless claims fell to 7.29 million; continuing claims are forecast to fall below 7 million for the first time since March for the week ended October 31. But as Rubeela Farooqi, chief U.S. economist for High Frequency Economics said in a recent note to clients, “We are watching the trend in weekly initial claims for any reversal of the recent modest declines.
“Against a backdrop of a raging pandemic, risks are skewed to the downside for the labor market.”
What to watch today
8:30 a.m. ET: CPI month-over-month, October (0.1% expected, 0.2% in September)
8:30 a.m. ET: CPI excluding food and energy month-over-month, October (0.2% expected, 0.2% in September)
8:30 a.m. ET: CPI year-over-year, October (1.3% expected, 1.4% in September)
8:30 a.m. ET: CPI excluding food and energy year-over-year, October (1.7% expected, 1.7% in September)
8:30 a.m. ET: Initial jobless claims, week ended Nov. 7 (725,000 expected, 751,000 during prior week)
8:30 a.m. ET: Continuing jobless claims, week ended Oct. 31 (7.285 million expected)
8:30 a.m. ET: Real average weekly earnings year-over-year, October (4.1% in September)
8:30 a.m. ET: Real average hourly earnings year-over-year, October (3.3% in September)
2:00 p.m. ET: Monthly budget statement, October (-$124.6 billion in September)
1:00 a.m. ET: Wix.com (WIX) is expected to report an adjusted loss of 13 cents per share on revenue of $249.93 million
6:00 a.m. ET: Pinduoduo (PDD) is expected to report an adjusted loss of 4.42 yuan per share on revenue of 48.95 billion yuan
After market close: Palantir (PLTR) is expected to report adjusted earnings of 4 cents per share on revenue of $279.25 million
4:00 p.m. ET: Applied Materials (AMAT) is expected to report adjusted earnings of $1.18 per share on revenue of $4.60 billion
4:05 p.m. ET: Disney (DIS) is expected to report an adjusted loss of 72 cents per share on revenue of $14.20 billion
4:05 p.m. ET: Cisco Systems (CSCO) is expected to report adjusted earnings of 71 cents per share on revenue of $11.85 billion
Markets pare gains as coronavirus vaccine euphoria wears off [Yahoo Finance UK]
UK economy rebounded by 15.5% prior to COVID-19 second wave [Yahoo Finance UK]
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