US employers likely stepped up hiring in March amid increased vaccinations and more pandemic relief money from the government, which would cement expectations for a boom that could push this year’s economic growth to the strongest since 1984, Reuters reports.
The Labor Department’s closely watched employment report on Friday is also expected to show people, mostly women, wading back into the labor market, drawn by those brightening economic prospects. But the labor market is hardly out of the woods yet, with the jobs deficit still huge and long-term unemployment becoming entrenched.
“The economy is on fire, fueled by vaccines and government stimulus,” said Sung Won Sohn, a finance and economics professor at Loyola Marymount University in Los Angeles. “All the stars are lined up to surprise us on the upside.”
Nonfarm payrolls likely surged by 647,000 jobs last month after increasing by 379,000 in February, according to a Reuters survey of economists. That would be the biggest gain since October. Estimates ranged from as low as 115,000 to as high as 1.1 million jobs.
Friday’s report marks a painful anniversary for the labor market. The March 2020 employment report was the first to reflect the mandatory closures of non-essential businesses such as restaurants, bars and gyms to slow the onset of the just-emerging COVID-19 pandemic. Nearly 1.7 million jobs were lost that month, and another 20.7 million would vanish the next.
Even if the March 2021 employment gains come in as estimated, it would leave the labor market roughly 8.8 million jobs shy of its peak level in February 2020. Economists estimate it could take at least two years to recoup the more than 22 million jobs lost during the pandemic.
As of Tuesday morning, the United States had administered 147.6 million doses of COVID-19 vaccines in the country and distributed 189.5 million doses, according to the U.S. Centers for Disease Control and Prevention. The White House’s massive $1.9 trillion pandemic relief package approved in March is sending additional $1,400 checks to qualified households and fresh funding for businesses.
That led to a significant improvement in labor market conditions last month. Reports this week showed a measure of factory employment jumped in March to the highest since February 2018, while layoffs announced by U.S. companies were the fewest in more than 2-1/2 years.
Small businesses also reported hiring more workers and the Conference Board’s measure of household employment rebounded after three straight monthly decreases.
Employment gains last month were likely led by the leisure and hospitality industry, which has borne the brunt of the pandemic. A strong increase in hiring is expected at factories as well as construction sites after being held down by unseasonably cold weather in February.
Economists expect job growth will average at least 700,000 per month in the second and third quarters. That, combined with the fiscal stimulus and about $19 trillion in excess savings accumulated by households during the pandemic, is expected to unleash a powerful wave of pent-up demand.
First-quarter gross domestic product estimates go as high as an annualized rate of 10.0%. The economy grew at a 4.3% pace in the fourth quarter. Growth this year could top 7%, which would be the fastest since 1984. The economy contracted 3.5% in 2020, the worst performance in 74 years.
