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'Very fragile' jobs recovery will now depend on how safe people feel

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A store closing advertisement is seen on the lower east side of New York City, August 7, 2020.

Shannon Stapleton | Reuters

July’s payroll growth represtented both a sign that workers continued to head back to their jobs and also a potential inflection point for an economy still in the clutches of the coronavirus.

A slowing in the resumption of normal economic activity likely means that the initial post-lockdown burst is winding down. The nearly 1.8 million increase in nonfarm payrolls is expected to represent the high point in the virus era.

From here, a return to full employment likely means a monthly grind where companies look to get their businesses going again while workers wrestle with the need to restore their income stream against persistent fears of further Covid-19 outbreaks.

It’s all part of what Becky Frankiewicz, president of staffing firm Manpower Group, calls “the rise of the feelings economy,” where perception will shape reality. Companies and employees who feel safe and confident will help propel a jobs market that actually may be better than it looks, at least in parts of the country where confidence is strong, she said.

“It’s another chapter in what I believe is a very fragile recovery. Overall, we’re headed in the right direction,” said Frankiewicz, who in a Thursday interview correctly predicted that the Friday payrolls count would be better than many had expected. “The interesting thing is it’s hyperlocal and is dependent increasingly on the redefinition of consumer confidence.”

Take Texas, for example. 

For weeks the state has been one of the worst virus hotspots in the country, with 175,000 new cases and close to 3,000 deaths just since mid-July. Yet Frankiewicz said the job market there is thriving.

“I’m hearing about how the virus is spreading in Texas, and when you look at the jobs posted, it’s consistently increasing since the end of May,” she said. “Employees and employers in Texas feel good about putting people back to work and feel good about going to work, and that’s what we see in the data.”

Manpower job posts for Texas, in fact, slumped from nearly 43,000 in mid-Feruary to just over 20,000 in March and then reached a pandemic high 32,369 in mid-July.

“It truly is a hyperlocal recovery,” Frankiewicz said.

By contrast, New York has struggled when judged by job postings, with an early July peak dropping significantly through the month. Another hot spot, Florida, has maintained its pace throughout the downturn despite its issues containing the virus. 

The political factor

Those trends are important as the move to get people back to work progresses.

The May-July period saw payroll additions of some 9.3 million, massive by historical standards but still leaving 16.3 million without jobs, or 9.2 million more than March. 

Still, there were some potential other upsides in the data: For one, those who were out of work for longer duration were called back in big numbers as the ranks of those jobless for five to 14 weeks tumbled by 6.3 million to 5.2 million. The work week also continued to increase, particularly for those in manufacturing, indicating higher levels of productivity.

“Beyond this it gets a little tougher,” said Shawn Snyder, head of investment strategy at Citi Personal Wealth Management. 

Like many others on Wall Street, Snyder is lookind to Congress for help in keeping the jobs recovery going. Warring factions on Capitol Hill remain apart in coming up with how to continue to support those still displaced by the virus.

“We built this policy bridge with the Fed and Congress. What they’ve done thus far has surprised to the upside, but it’s not long enough,” he said. “We’re going to need to see the bridge extended.”

What form the new aid package take will be as important as the dollar figure.

Frankiewicz said the job opportunities have shifted away from “more traditional” jobs such as sales, services and money managing and into fields such as health are and family therapy, as well as movers and warehouse workers. Technology, particularly in analytical and transformational fields, also have seen big demand increases.

“There’s a shifting in jobs. Now we’re seeing that structural change, accelerated by the crisis in our country,” she said. “The whole shape of our market is starting to change in front of our eyes.”

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