Staggered reopenings. Tourism booms that might prove temporary. Each U.S. business vertical hard-hit by the pandemic has been impacted in different ways.
For those companies dependent on face-to-face interactions, of course, the fall has been swift – and the climb back has been a steep one. On Thursday (Aug. 20), the U.S. Labor Department reported another one million-plus unemployment claims, this time logging 1.1 million claims for the week ending Aug. 15.
That’s higher than the 923,000 that had been expected, and snaps what some observers had hoped would be a trend of less than one million weekly claims, which we’ve only seen in one week over the past several months. (The Labor Department reported 971,000 claims for the week ending Aug. 8.)
The unemployment rate now stands at 10.2 percent – stubbornly high in double digits, although down from a record 14.7 percent in April.
But drill down a bit and the numbers provide further evidence that any U.S. recovery will be slow going – and uneven. Yes, the Labor Department reported earlier this month that the U.S. economy added 1.8 million nonfarm jobs in July, but that actually represents a slowdown from previous months. Nonfarm payrolls increased by 4.4 million in June and 2.7 million in May.
In fact, total nonfarm employment was 8.4 percent lower in July than in February, before the pandemic hit. That translates into 12.9 million fewer jobs, an indication of the hole we’re digging out of.
And although we won’t get details for August until the next Labor Department monthly report in early September, the latest data point to an asymmetrical recovery. For instance, July’s greatest boosts in employment came in the government, leisure and hospitality, and retail trade sectors.
Of those three, leisure and hospitality accounted for 592,000 job gains, or about one-third of the month’s total. Employment at food establishments likewise rose more than 500,000, adding to 2.9 million gains in May and June.
However, total employment in food services was still down 2.6 million positions from February’s levels. Similarly, total retail employment was 913,000 positions lower when measured against February.
Such a result – signs of a partial recovery, but not a full one – is consistent with the business reopenings that are dotting the U.S. landscape. But it remains to be seen how permanent those reopenings will be.
And unemployment remains stubbornly high elsewhere in the U.S. economy. As reported by the travel news site Skift, of the 592,000 jobs added within hospitality verticals, only 2,800 were on-site and location-specific.
Overall, the sector’s unemployment rate is about 38 percent, Skift said. The site quoted Chip Rogers, CEO of the American Hotel & Lodging Association (AHLA), as stating that “once leisure travel comes to an end, which traditionally happens in September or October, if it’s not replaced by business travelers — and compounded with the challenge of many banks starting to tighten up on loan forbearance terms — you could have a perfect storm that sets off a chain of delinquencies that could be devastating.”
As for retail, one wonders whether the gains there might prove to be short-lived. In PYMNTS’ latest Main Street on Lockdown study, 28 percent of retail SMB owners said they were sure they wouldn’t survive the pandemic. That’s up from 17 percent who felt the same way in March. And our latest study found that another 30 percent or so of SMBs aren’t sure whether they’ll survive.
All of that implies a cautious approach to hiring. And any ripple effects from retail headwinds could spread – most immediately to consumer spending, which in turn will further hurt the top lines of those firms that do survive.