Breakingviews – A pre-pandemic U.S. job market is a long way off – Reuters

A "Now Hiring" sign advertising jobs at a hand car wash is seen along a street, as the spread of the coronavirus disease (COVID-19) continues, in Miami, Florida, U.S. May 8, 2020.
WASHINGTON, Jan 7 (Reuters Breakingviews) – The U.S. job market is still nursing itself back to health two years after the Covid-19 pandemic began. Employers added an average of 537,000 jobs per month in 2021, and the jobless rate fell to 3.9% in December, the Labor Department said on Friday. Those are healthy trends. Yet the economy remains off-kilter.
America's unemployment rate has fallen quickly from its 6.7% level in December 2020 while the labor force participation rate increased 0.4 percentage points to 61.9% in December. Still, overall employment is down by 3.6 million jobs from the April 2020 peak.
And jobs growth fell short of forecasts last month, even though the data was collected before the Omicron variant surge. Payrolls increased by 199,000 positions, about half of what economists surveyed by Reuters expected. Employers are struggling to find workers, with a record 4.5 million people quitting their jobs in November.
There's plenty of evidence of the continuing distortions created by the coronavirus. The highest rates of people leaving their positions are in sectors where remote work is not an option and Covid risks are elevated. Healthcare, retail and restaurants are facing big labor shortages. For example, there were 1.8 million job openings in healthcare and social assistance in November, but only about 6,100 workers were added last month.
The problem will get worse before it gets better. Nearly 20% of nurses, doctors and others in the industry have quit since the pandemic began, according to a Morning Consult poll from October. About 31% of those who have stayed are considering leaving, and that’s before the current load of Omicron cases.
The mismatch between the supply and demand of workers could last a while, at least in certain sectors. And pay raises haven’t made meaningful dents in the hiring challenge. Hourly wages for hotel and restaurant workers have gone up by more than 10% over the last year to more than $18 an hour, per the Labor Department. But the sector had the highest quits rate in November despite 1.3 million job openings. Anything resembling a pre-pandemic labor market looks a long way off.
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– The U.S. economy added 199,000 jobs in December while the unemployment rate fell 0.3 percentage points from November to 3.9%, the Labor Department said on Jan. 7. Economists surveyed by Reuters expected payroll gains of 400,000.
– Job growth averaged 537,000 per month in 2021. Nonfarm employment has increased by 18.8 million since April 2020 but is down by 3.6 million, or 2.3%, from its pre-pandemic level in February 2020.
– In December 2020, the unemployment rate was 6.7%, up from 3.5% in February 2020.
– A record 4.5 million people quit their jobs in November, the Labor Department said in a separate report on Jan. 4.
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America’s natural gas market was largely disconnected from the world for decades. Transportation limits meant prices reflected local demand and supply only. But the industry’s infrastructure has changed, and it means that U.S. natural gas is going global. That will continue to have an effect on domestic prices.
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