Restaurants and hotels continued their streak of adding the most jobs out of any industry in May

A waiter pours champagne for customers in New York City.
A waiter without a mask pours champagne for customers during the “Eggs and Leggs Drag Brunch” at Da Capo on the Upper West Side on May 22, 2021 in New York City.

  • The US added 559,000 jobs in May, a bounce back from the disappointing 278,000 added in April.
  • As in April, leisure and hospitality had the largest number of jobs added among industry sectors.
  • On the other end, construction employment dropped by 20,000.
  • See more stories on Insider’s business page.

More US jobs were added in May than in April, and most of the gains once again fell in the leisure and hospitality industry.

The US added 559,000 nonfarm payroll jobs in May, according to the latest jobs report from the Bureau of Labor Statistics, below economists’ median estimate of 674,000, per Insider’s Ben Winck.

Leisure and hospitality saw another strong month of job gains. The Bureau of Labor Statistics notes that most of these gains were from food services and drinking places. That includes places like restaurants and bars.

Most industries saw some increase in their employment over the month, but some industries saw larger gains than others. The following chart shows where the job gains, and losses, were from April 2021 to May 2021:

Employment in leisure and hospitality increased by 292,000 in May after increasing by 328,000 in April, totaling four consecutive months of six-figure job gains.

“The leisure and hospitality sector added another healthy amount of jobs, but it was roughly the same number as were added the month before,” Nick Bunker, economic research director at Indeed, wrote in a statement. “Any future pickup in job growth for the overall labor market is dependent on this industry seeing more of a bounceback.”

Elise Gould, senior economist at the Economic Policy Institute, wrote on Twitter that the industry is still below pre-pandemic employment by about 2.5 million. She added she’s “optimistic that we will continue to see solid growth in coming months as vaccine distribution continues and businesses find it safe to reopen.”

The second-largest gain was in the education and health services sector at 87,000, which was higher than the 25,000 job gains this industry had in April. Most of the government jobs added in May were from local and state education jobs. State government education added 50,000 jobs and local government education added 53,000 jobs.

“Growth in ambulatory health care services accounted for essentially all of the employment change in health care,” BLS wrote in an analysis.

Four sectors saw job losses in May, including retail trade which lost 5,800 jobs and construction which lost 20,000 jobs in a single month. At almost 15.2 million jobs, retail trade is still 2.6% below pre-pandemic employment, while at about 7.4 million jobs, construction is still 2.9% below February 2020 employment. Additionally, employment in mining and logging did not change from April.

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US stocks rise after jobs data shows labor market strengthening after disappointing April report

Stock trader
Peter Tuchman, right, works among fellow traders at a post on the floor of the New York Stock Exchange, Wednesday, March 4, 2020.

  • US stocks rose Friday on the latest jobs data that indicate a strengthening labor market, though at a slower pace than analysts were predicting.
  • “The economy is still far from showing substantial progress with the labor market recovery,” an analyst said.
  • The 10-year US Treasury yields slightly fell to 1.604% compared with Thursday’s 1.624%.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

US stocks rose Friday as investors cheered May jobs data that indicated a strengthening labor market after a disappointing April reading.

Non-farm payrolls showed the US economy added 559,000 jobs in May, the Bureau of Labor Statistics said Friday. However, that was slightly lower than the 674,000 median estimate economists surveyed by Bloomberg were predicting.

“The May nonfarm payroll report showed that the economy is still far from showing substantial progress with the labor market recovery,” Ed Moya, senior market analyst at Oanda, said in a note.

He continued: “Labor market hiring remains modest at best and this should support a complete labor market recovery for the Fed at some point between the end of 2022 and early 2023.”

The reading shows a sharp acceleration from April’s dismal report, which saw job growth land well below economist forecasts. The May increase marks a fifth straight month of job additions.

In the bond market, the 10-year US Treasury yields slightly fell to 1.604% compared with Thursday’s 1.624%.

US stocks closed mostly lower Thursday as investors mulled over a new report that President Joe Biden may be open to a lower tax hike for corporations. Mega-cap tech stocks led losses, with Apple, Google, Facebook, and Amazon all down at least 1% Thursday. Tesla fell as much as 5%.

Here’s where US indexes stood at the 9:30 a.m. ET open on Friday:

AMC Entertainment has asked shareholders to let it issue another 25 million shares in the wake of the stock’s 2,300% rally, saying it will fortify the movie-theater chain with the means to chase acquisitions “hard” and turn itself around. The company CEO Adam Aron revealed this in a YouTube interview with Trey’s Trades Thursday night.

Meanwhile, billionaire investor Bill Ackman confirmed that his blank check company, Pershing Square Tontine Holdings, is in talks to spend about $4 billion for a 10% stake in Universal Music Group. He also unveiled plans to launch a new investment vehicle and deploy up to $14 billion on future transactions.

In cryptocurrencies, bitcoin slipped as much as 8% after Elon Musk signaled a potential breakup with the digital asset by posting a broken-heart emoji and a reference to a popular Linkin Park song. Bitcoin has fallen more than 40% since its April record high of near $65,000.

West Texas Intermediate crude was up 0.60%, to $69.22 per barrel. Brent crude, oil’s international benchmark, was also up 0.52%, to $71.68 per barrel,

Gold was down 1.9% to $1873.70 an ounce.

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Friday’s jobs report will show hiring rebounded last month after a shockingly grim April, economists say

Fair Wage Demonstration Hiring Washington DC
  • Friday’s jobs report will show whether hiring rebounded in May or slowed further from April’s weaker-than-expected pace.
  • Economists are forecasting a gain of 674,000 payrolls and for the unemployment rate to hit a new pandemic low.
  • Whether the report misses or exceeds expectations could shift Fed policy, Bank of America said.
  • See more stories on Insider’s business page.

The Bureau of Labor Statistics’ monthly jobs report is among the most closely watched gauges of economic health, but Friday’s release is even more anticipated than usual.

It’s the first reading since April data showed a sharp slowdown in hiring and stupefied economists across the board. The Friday report will reveal whether the deceleration was a one-month fluke – or the start of a stagnating recovery.

Economists are largely optimistic. The median estimate for May payroll growth sees the US adding 674,000 jobs throughout the month. That would mark a sharp rebound from April’s 266,000-payroll bounce. Economists also expect the unemployment rate to dip to 5.9% from 6.1%. That level would represent a new-pandemic-era low.

Data published Thursday suggests the forecasts could ring true. ADP’s monthly employment report showed the US adding 978,000 private payrolls in May, blowing the 674,000-payroll estimate out of the water. The reading marked the strongest month of private-payroll growth since June 2020 and a fifth straight month of job additions.

Separately, weekly filings for unemployment benefits fell to a fifth consecutive pandemic-era low last week as layoffs slowed further. Jobless claims totaled an unadjusted 385,000 for the week that ended Saturday, narrowly beating the median estimate for 388,000 claims. Claims have steadily trended lower throughout May, signaling the labor market’s recovery picked up after April’s less-than-stellar data.

To be sure, weekly claims counts and ADP’s report are also volatile and only loosely tied to the government’s nonfarm payrolls data. As seen just one month ago, strong prints from both indicators can still precede an upsetting jobs report.

“It is hard to know what to make of the signal from the ADP report because it has not reliably predicted the BLS data in recent months,” Daniel Silver, an economist at JPMorgan, said in a Thursday note. “Declines in initial claims likely reflect improving conditions in the labor market, although other factors could also be at play.”

Hiring should improve, but don’t get too excited

Experts are finding reasons to temper their expectations for other labor-market signals. Data from the Ultimate Kronos Group and Homebase both show modest increases in hours worked in May, Bank of America economists said last week. The former’s shift-work measure rose by just 0.1% between the May and April payroll weeks, compared to the 0.3% decline from the prior period. The reading “could mean a slightly better jobs report but does not suggest a gangbusters print,” the team led by Michelle Meyer said.

The Homebase employee working index rose just 1.7% between the May and April survey weeks. That similarly hints at a “soft reading,” the bank added.

Other metrics, such as the Conference Board’s labor-market differential index and national purchasing managers’ indices, suggest hiring improved in May. Still, the BofA economists cautioned against “reading too much” into such information for the “magnitude of hiring,” and instead see them as pointing to a general improvement in hiring.

“All told, we see scope for decent gains in employment in May following a disappointing report in April,” the team said.

Taper time? Or delay further?

There’s a fair deal riding on the Friday report, the bank added. The Federal Reserve has indicated it won’t pull back on its ultra-accommodative monetary policy until it sees “substantial further progress” toward maximum employment and above-2% inflation.

The latter condition is already being met, with price growth trending above average as the US reopens. The Friday jobs report, then, is a “critical data point” for the Fed’s next steps toward policy normalization, the BofA economists said.

On one hand, a stronger-than-expected report could push the central bank further toward tapering its emergency asset purchases. The Fed has been buying at least $120 billion of Treasurys and mortgage-backed securities each month to support market functioning. Officials have been adamant they don’t expect to shrink the purchases in the near-term, yet minutes from the Federal Open Market Committee’s April meeting suggested they may soon discuss a plan for eventual tapering.

A strong rebound in employment “could give the Fed more confidence in the recovery and the ability to start guiding markets toward a taper,” BofA said.

Conversely, another disappointing report could push tapering further into the future, the economists said. The central bank has made clear that it’s willing to maintain its easy monetary policy for as long as needed to support the economic recovery. Any sign of the labor market recovery stagnating would likely entice the Fed to keep rates near zero for as long as needed to promote hiring.

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April’s dismal jobs report shows the 2019 economy is not coming back and that’s a problem

bartender
The US is reopening to a reshaped economy where consumer spending is recovering faster than jobs.

  • The US economy only added 266,000 jobs in April, far less than economists’ predictions of 1 million.
  • While leisure and hospitality showed the biggest gain, they were still far below pre-pandemic norms.
  • The jobs report signals that the reopened economy won’t look like 2019’s for a long time.
  • See more stories on Insider’s business page.

April’s jobs report is a big yikes.

The US economy only added 266,000 nonfarm payrolls last month, the Bureau of Labor Statistics announced Friday. That’s way less than 1 million, the median estimate for payroll gains by economists surveyed by Bloomberg. While it was the fourth consecutive month of payroll increases, it was the smallest since September.

As a Morgan Stanley note from economist Robert Rosener’s team stated, “The expected ‘string’ of strong jobs reports has started to look more like a modest trail of crumbs.”

In the process, unemployment has risen again, albeit slightly from 6% to 6.1%, it was the opposite direction of the forecasted decline to 5.8%.

Job growth was strongest in the leisure and hospitality sector, adding some 331,000 payrolls. More than half of this increase was linked to hiring in food services and bars, offsetting declines in other sectors such as temporary help services.

The staggering numbers indicate that while the economy is still set to come roaring back to life this year, it won’t look anything like it did in 2019, and jobs may not come back at nearly the same rate as consumer spending ramps up.

Consumer spending recovering faster than jobs

The US economy is on the verge of a glow-up. Vaccines are increasingly finding their way into arms, big cities are reopening, and Americans are sitting on $2.6 trillion in excess savings, between three stimulus checks and a decline in discretionary spending.

They’re already swiping their cards on things like outdoor activities, transit, restaurants, clothes, and beauty as they prepare for what Insider reported is shaping up to be a “hot vaxx summer.” Economists expect this to continue, predicting that a lockdown lift will see the biggest boomtime in a generation.

But the return of consumers to the economy hasn’t yet been matched with blowout job growth, which is putting the predicted post-pandemic boom in a new light. The US is still down roughly 9.8 million jobs from its pre-pandemic peak. While relaxing restrictions is expected to help narrow this gap within the incoming months, April’s payrolls spark concern over how easy these gains will be.

The disruption to the experience economy is still taking its toll. Leisure and hospitality may have seen the most job gains in April, but employment in certain industries of this sector still hasn’t reached pre-pandemic levels.

Hallmarks of the 2019 economy that suddenly went on pause last year – the payrolls of motion picture and sound recording industries, travel arrangement and reservation services, performing arts and spectator sports, and accommodation – were all still at least 25% below where they were before the pandemic. Hollywood and travel may not look the way they once did on the jobs front – or not for years, meaning job gains will have to come from somewhere else.

Reopening to a reshaped economy

Experts have been warning of millions of jobs permanently lost to the pandemic, Insider’s Ben Winck reported.

Countries will need to “think well in advance” of what a post-pandemic economy will look like so as to add jobs where they’re going to be, Kristalina Georgieva, managing director of the International Monetary Fund, said in a Thursday video conference. Federal Reserve Chair Jerome Powell also noted that millions of Americans will struggle to find work as they acclimate to a permanently changed labor market.

“The real concern is that longer-term unemployment can allow people’s skills to atrophy, their connections to the labor market to dwindle, and they have a hard time getting back to work,” he said in the conference. “It’s important to remember we are not going back to the same economy, this will be a different economy.”

However, some experts remain optimistic. Jason furman, former top economist to former president Barack Obama, said on MSNBC Friday that he expects hiring to pick up during the summer. “I think we’re gonna see a hot summer in the labor market,” he said.

Lockdown lifts are just beginning and vaccinations are still rolling out. That is all to say: it’s still early on. But that we’re in the first stages of a recovery means that the 2019-vintage experience sector of the economy won’t snap back instantaneously, and that other industries are still grappling with the worker effects of not having properly estimated demand for goods during the pandemic.

April’s jobs report was a strong signal that recovery won’t be as simple as going back to the economic playbook from the before times. Instead of seeing an economy restored to what it once was, we might see an economy reshaped into something new.

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Why America’s economic recovery is stumbling as experts badly misjudge the labor market

Now Hiring sign
A customer walks by a now hiring sign at a BevMo store on April 02, 2021 in Larkspur, California.

  • April’s jobs report was a shocking miss, suggesting the hiring rebound many anticipated was an illusion.
  • Virus fears, childcare pressures, and unemployment benefits all likely drove the weak payrolls read.
  • Biden has proposed massive packages focused on jobs, but they likely face months of negotiation before passage.
  • See more stories on Insider’s business page.

Democratic political advisor James Carville became famous in the 1990s for his phrase “it’s the economy, stupid.”

After April’s shockingly disappointing jobs report, it looks more like “it’s not the economy, stupid, it’s the virus.”

March’s strong jobs data – along with widespread projections of a coming economic boom – had raised optimism among economists for a continued recovery in the labor force. It prompted Federal Reserve Chair Jerome Powell to deem March an “inflection point” for the reopening of the economy, and experts saw it kicking off a season of outsize payroll increases. But the drop in April makes clear the virus continues to bite.

Economists had expected payroll gains to reach 1 million, but the country added just 266,000 jobs last month. It was the smallest monthly increase since January and the biggest miss of payroll forecasts in more than two decades. The unemployment rate rose to 6.1%, female employment declined, and, although hard-hit sectors like leisure and hospitality saw healthy gains, most others posted either meager growth or shed jobs entirely.

The Bureau of Labor Statistics’ Friday release underscores just how much the labor market still has to recover, and that the climb won’t be as easy as most economists anticipated. Even if April stands out as a gloomy outlier, the average pace of payroll growth suggests it could take years to fully recoup the millions of jobs lost to the pandemic.

What went wrong?

The jobs report was such a shock that it’s hard to find a single explanation at first glance. It also highlights just how inadequate forecasting tools are for measuring this unique economic moment.

Economists typically use a combination of quantitative and qualitative data to estimate future growth. Indicators like weekly jobless claims and hours worked join anecdotal evidence and broad surveys to create forecasting models. Economists’ calculations, when tallied together and averaged, usually come close to guessing monthly payroll additions.

The April data serves as a wake-up call for the many forecasters who didn’t even come close to guessing correctly. Whether models overlooked details like COVID-19 fears or bullish biases tarnished forecasts, economists need to reconcile how they were so wrong.

The disappointment was likely fueled by several factors instead of one solvable hurdle. Despite President Joe Biden’s overdelivering on vaccinations, the country is far from placing the coronavirus pandemic behind it. Daily case counts still averaged about 50,000 at the end of last month, and highly contagious strains continue to spread across the US.

The coronavirus pandemic has also been notable for the “she-cession,” hurting female employment much more than men. The absence of affordable childcare and lack of in-person schooling around the country likely kept some Americans home instead of working, as born out by the April report, which showed women – who disproportionately take on childcare responsibilities – losing jobs through the month.

How big is the labor shortage?

Last month also saw several businesses across the manufacturing and service sectors reporting difficulties in finding workers. The jury is still out on how widespread worker shortages might be, as about 10 million Americans remain unemployed. On one hand, some economists suggest boosted unemployment benefits cut into the incentive to find work. Strong wage growth in the leisure and hospitality sector also signals businesses may need to lift compensation to attract workers.

“The benefits are due to expire in September but perhaps people think jobs will be just as easy to find then as they are now, so why take a job today?,” Ian Shepherdson, chief economist at Pantheon Macroeconomics, said. “If people continue to resist taking the jobs on offer at the pay on offer, then wages will have to rise more quickly.”

The Chamber of Commerce called on lawmakers to withdraw the federal benefit to unemployment insurance following the April report. The supplement results in 25% of recipients earning more from unemployment benefits than by working, Neil Bradley, executive vice president and chief policy officer at the Chamber of Commerce, said in a statement.

“We need a comprehensive approach to dealing with our workforce issues and the very real threat unfilled positions pose to our economic recovery from the pandemic,” he added.

The April data does not quite agree with the chamber’s argument, showing labor demand overshadowing anecdotes of a supply shortage. April job gains were strongest in lower-wage industries and in sectors with in-person jobs. The composition of last month’s job additions “doesn’t scream supply constraints as the problem,” Nick Bunker, an economist at Indeed, wrote on Twitter.

Separately, the number of Americans temporarily laid off ticked slightly higher in April. That also signals labor demand wasn’t as robust as businesses’ anecdotes suggested.

Looking to other labor-market data, the steady decline in weekly jobless claims now looks much less encouraging for the recovery. The April uptick in unemployment comes as filings for unemployment benefits fell throughout the month to numerous pandemic-era lows. The drops initially seemed to signal that more Americans were returning to work, but BLS’ report suggests the downtrend has more to do with Americans dropping out of assistance programs than finding employment.

It could take months for the government to lend a hand

Much of the last few months’ promising job gains were linked to massive stimulus packages. The CARES Act helped a sharp hiring rebound after initial COVID-19 lockdowns in March 2020. And Biden’s $1.9 trillion plan in March 2021 spurred stronger economic activity last month.

The president has since rolled out two new spending proposals, the larger of which would spend $2.3 trillion on job creation. The American Jobs Plan would create millions of jobs by funding traditional infrastructure projects, clean energy initiatives, and nationwide broadband, Biden said in a Thursday speech. Biden’s administration has at other times cited a Moody’s Analytics projection of 2.7 million new jobs from the American Jobs Plan.

The smaller package, named the American Families Plan, could support hiring in its own right by overhauling the care economy, as it seeks to provide paid family and medical leave and childcare support.

Yet such support is likely months away. Republicans have balked at both plans, lambasting their hefty price tags and the tax hikes proposed to offset them. Democrats seem to face a challenge passing the package on a party-line vote via reconciliation, as some moderates in their party have yet to throw their full support behind the follow-up packages as they exist.

To be sure, the April report represents just one month of hiring. May numbers could show a healthy rebound and revive the positive trend. The economy is not even fully reopened from virus-safety considerations yet, so rebounds are likely.

But with additional fiscal support far on the horizon and economists highlighting a number of obstacles hindering job growth, the resurgent spring recovery for jobs that many economists were predicting is gone.

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The disappointing April jobs report showed gains were mainly in leisure and hospitality

A waiter in New York
  • The latest jobs report came in far below economists’ estimates.
  • But the hard-hit sector leisure and hospitality saw another month of strong gains.
  • Professional and business services saw the largest job decline between March and April.
  • See more stories on Insider’s business page.

The leisure and hospitality sector was the only major industry to see a six-digit job gain between March and April.

The US added just 266,000 nonfarm payroll jobs in April, according to the latest jobs report from the Bureau of Labor Statistics. This increase was far below the 1-million job gains economists expected to see. BLS wrote in the report that the leisure and hospitality sector saw 331,000 jobs added in April “as pandemic-related restrictions continued to ease in many parts of the country.”

Employment gains across sectors were not as spread out as they were in March. The following chart shows what sectors saw job gains and losses from March to April:

The biggest rebound in April was in leisure and hospitality; this was the third-consecutive month of job gains for this sector. Most of the jobs added in leisure and hospitality were from food services and drinking places. Food services and drinking places added 187,000 jobs last month, but the industry is still 13.5% below its pre-pandemic employment level from February 2020.

“At least job gains picked up in the leisure and hospitality sector, where job growth is desperately needed,” Nick Bunker, an economist at Indeed, said in a statement about the latest figures. “But the gains were not as fast as hoped for or, frankly, as needed. Employment in these industries is still almost 17% below pre-pandemic levels.”

The sector that saw the second-most gains was government. This sector’s employment rose by 48,000 last month. BLS noted that most of the gains in this sector were in local education, which added 31,000 jobs in April.

After adding jobs in March, employment in professional and business services dropped the most last month. This sector lost 79,000 jobs last month. BLS wrote in the jobs report that “employment in temporary help services declined by 111,000” in this sector.

Construction, however, did not see any employment change from March to April. The sector did add 97,000 jobs in March after a loss of 57,000 jobs in February.

“Shockingly in a period of quickly rising housing prices, construction industries added no new jobs in April,” Bunker said.

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‘What is everybody else not seeing?’ One top economist details why Friday’s jobs report will double the average forecast – and explains why she’s comfortable being an outlier

Now Hiring man with mask
A man wearing a mask walks past a “now hiring” sign on Melrose Avenue amid the coronavirus pandemic on April 22, 2021 in Los Angeles, California.

  • Jefferies’ estimate for April payroll growth is 2.1 million jobs, double the consensus forecast.
  • Economist Aneta Markowska cited time-sheet data, jobless claims, and surveys for her bullish forecast.
  • Reopening and stimulus will play a bigger role in the April report than in March, she added.
  • See more stories on Insider’s business page.

The Bureau of Labor Statistics’ upcoming jobs report is expected to show strong payroll growth through April as the US reopened. But where most economists see a moderate month-over-month improvement, Aneta Markowska of Jefferies stands out in her bullishness.

The median estimate from economists surveyed by Bloomberg for April payroll growth sits at 1 million payrolls. That would mark a pickup from the 916,000 jobs added in March and the strongest month of job growth since August.

Markowska, Jefferies’ chief economist, forecasts that the economy added 2.1 million jobs last month. Not only is that more than double the median forecast, but also 800,000 payrolls greater than the next highest projection from a top economist. The unemployment rate will fall to 5.2% from 6% and beat the forecast of 5.8%, according to the bank.

While Markowska’s estimates stand leagues away from the consensus, the chief economist told Insider she has a tougher time understanding the median forecast than supporting her own.

“To be honest, I’m sort of asking the same question in reverse. What is everybody else not seeing?” Markowska said. “I run a number of models and the lowest one gives me an estimate of 1.4 million.”

Looking to quantitative data, Markowska highlighted changes in jobless claims as supporting growth of more than 1 million payrolls. Kronos data tracking hours worked correlates well with nonfarm payrolls and signals an April gain of 1.6 million jobs, she added.

BLS’ survey timing also backs up Jefferies’ forecast. The March report had little to do with reopening, as the survey window closed on March 13, Markowska said. The April report, due for release Friday morning, should better capture how reopening and Democrats’ stimulus boosted job growth in the leisure, hospitality, and retail sectors, she added.

Still, the hard data only makes up part of Markowska’s projection. Reports like the Census Bureau’s Household Pulse Survey and The Conference Board’s own survey point to growth as high as 4 million payrolls, the economist said. Although survey responses are volatile and harder to tie to quantitative data, they support Markowska’s argument for a blowout month of job gains.

“Obviously [3 million] sounds excessive, and I wouldn’t rely on any of those individually. But they certainly give me more confidence that we could get something closer to 2 million,” she said.

Aneta Markowska
Jefferies Chief Economist Aneta Markowska.

Looking beyond April growth and into 2022

Robust hiring could last into the summer, and even though Markowska sees the pace tapering off later in the year, she still expects growth to trend above the pre-pandemic norm. Jefferies’ GDP forecast calls for a 7% expansion in 2021, slightly exceeding the Federal Reserve’s estimate for 6.5% growth. That rate implies average monthly payroll additions of about 500,000 payrolls in the final month of 2021, Markowska said.

The chief economist’s optimism isn’t relegated to 2021. Consensus forecasts see the rate of recovery dropping off in 2022 as stimulus expires and easy gains turn into more modest improvements. But where the Fed expects GDP growth to slow to 3.3% next year, Markowska cited a still-elevated savings rate and expectations for stronger production for her 5% growth forecast.

“There’s still a lot of upside for industrial production. I think, by the middle of the year, you’re going to be looking at capacity utilization rates that match the peaks from the last cycle, and they’re going to keep going,” she said.

“That’s where I really differ: the ability of this economy to sustain a lot of that momentum. Whereas a lot of people see a fiscal cliff happening next year, I think that’s more of a story for 2023.”

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Avocado toast will save the economy

avocado toast
Millennials are set to drive restaurant spending during the economic reopening.

  • Restaurants are making a comeback.
  • March’s jobs report smashed expectations, adding 916,000 against a 660,000 estimate, and dining led the way.
  • Led by dining, leisure and hospitality added 280,000 jobs, so avocado toast and the like should lead to a lot more hiring.
  • See more stories on Insider’s business page.

The economy really began to reopen in March, and restaurants led the way.

The US economy added 916,000 jobs in March, trouncing economic forecasts that predicted that number would look more like 660,000 jobs. The leisure and hospitality industry not only drove nearly all of February’s jobs gains, it accounted for roughly one-third of March’s upswing. With 280,000 payroll additions last month, it added more jobs than any other sector.

Leisure and hospitality consists of arts, entertainment, and recreation, ranging from performing arts and museums to amusement parks. It also includes accommodation and food services, which contributed to 215,000 of the sector’s added payrolls in March. Food services and drinking places fueled most of these additions, with 175,000 new jobs alone. It’s becoming clear that eating out will be very important for the economic recovery.

While restaurants made huge job gains last month, the sector will also need Americans willing to spend on dining out for its recovery – along with that of the wider American economy.

Americans seem to have already started doing that. For the seven days ending March 27, spending on restaurants and bars was up a whopping 200% year-over-year, per Bank of America card data. The more representative two-year change still showed an 11.9% increase. Overall, BofA found total card spending up 82% year-over-year and up 20% over two years for the period, signaling that trillions of federal stimulus are working.

Of course, with restaurants come things like avocado toast, a luxury long used as a metaphorical stick to beat the millennial generation with, perpetuating the narrative that this frivolous generation isn’t focused on the right things financially. While that’s not quite true, it is the case that millennials ate out more and spent more eating out than any other generation prior to the pandemic. They’re on track to be the biggest food and beverage spenders by 2030.

High-earning millennials saw a lot of excess cash build up in their savings accounts during the pandemic. That puts them in prime position to cash out on a favorite experience they’ve been deprived of for a year.

They’ve already begun fueling New York City’s indoor dining scene when restrictions were lifted and splurged while doing so. Millennials shelled out for high-priced items like steak, wine, and tasting menus, sending check averages and tips on the climb, Bloomberg’s Kate Krader reported.

It turns out the economic reopening – and recovery – will taste like avocado.

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The economy added almost 1 million jobs in March, but 14.3 million people are still jobless

Coronavirus movie theater
Moviegoers shop at concessions before the movie “Godzilla vs. Kong” on the reopening day of the TCL Chinese theatre during the outbreak of the coronavirus disease (COVID-19), in Los Angeles, March 31, 2021.

  • The March jobs report trounced forecasts, but some unemployment gauges show a steep climb ahead.
  • The “real” unemployment rate used by Fed Chair Powell and Treasury Secretary Yellen fell to 8.7% from 9.1%.
  • The measure includes misclassifications and workers who dropped out of the labor force since February 2020.
  • See more stories on Insider’s business page.

The March jobs report was a hugely positive surprise.

The Bureau of Labor Statistics said Friday that 916,000 nonfarm payrolls were added last month. That compares to the 660,000 expected by economists surveyed by Bloomberg and an upwardly revised gain of 468,000 jobs in February. The headline unemployment rate fell to 6%, matching the consensus forecast.

The data signals that the $1.9 trillion stimulus passed in March and gradual reopening drove a strong rebound for the labor market. Leisure and hospitality businesses – those hit hardest by the pandemic and related lockdowns – counted for one-third of the month’s additions. Construction firms added roughly 110,000 payrolls after hiring contracted during the prior month’s harsh storms.

Still, alternative metrics show there’s plenty of progress to be made before the economy fully retraces its pandemic-era losses. Federal Reserve Chair Jerome Powell and Treasury Secretary Janet Yellen have touted a “real” unemployment rate that includes workers that have been misclassified as having a job while they’re on pandemic-related furloughs and Americans who dropped out of the labor force since February 2020.

By Insider’s calculations, that rate fell to 8.7% in March from 9.1%. That level suggests 14.3 million Americans are still jobless.

Separately, the Bureau of Labor Statistics’ broader read of nationwide unemployment remains at worrying highs. The U-6 rate – which includes Americans employed part-time for economic reasons and workers only marginally attached to the labor force – dipped to 10.7% from 11.1%.

The rate of job growth seen in March still pushes a full recovery well into the future. Even if the US continues to add 916,000 jobs every month, it would take until January 2022 to lift employment back to levels seen before the pandemic.

“Today’s report confirms that labor market conditions are rapidly heating up but reaching broad-based and inclusive full employment will be a multi-year process,” Lydia Boussour, lead US economist at Oxford Economics, said in a note.

The White House is already teeing up its next booster for US job growth. President Joe Biden revealed a $2.3 trillion spending plan on Wednesday. The so-called American Jobs Plan includes funds for restoring roads and bridges, building affordable housing, and installing a nationwide broadband network, among other projects. The proposal should create millions of union jobs over the next eight years, according to the president.

“Now it’s time to rebuild,” Biden said during his announcement, adding: “Wall Street didn’t build this country. You, the great middle class, built this country, and unions built the middle class.”

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The blowout March jobs report was powered by new employment in restaurants, schools, and construction

Restaurant coronavirus orange county
People dine at Alessa while pedestrians walk along the Promenade on Forest Ave, a pedestrian-only experience featuring shopping and restaurants, in Laguna Beach Tuesday, March 30, 2021.

  • Sectors with the strongest job gains in March signal reopening will fuel a swift economic rebound.
  • Leisure and hospitality businesses counted for one-third of last month’s gain of 916,000 payrolls.
  • Hiring in the government and construction sectors improved significantly from the prior month.
  • See more stories on Insider’s business page.

The sectors that added the most jobs in March hint at just how much the economic reopening might revitalize the US labor market.

Businesses added 916,000 nonfarm payrolls last month, according to Bureau of Labor Statistics data published Friday morning. The reading handily beat the median estimate of 660,000 payroll additions from economists surveyed by Bloomberg, and signaled that partial reopening, improved vaccination, and new stimulus fueled a strong uptick in hiring.

Job additions were also more evenly spread in March than in the month prior. While February saw leisure and hospitality businesses drive nearly all of the month’s gains, the sector counted for roughly one-third of the March upswing.

Public-sector hiring served as the second-largest source of job additions with 136,000 new jobs, suggesting state and local governments aren’t facing the same stagnant recoveries they endured after the financial crisis.

Job growth in the construction sector also rebounded after harsh winter storms led payrolls to shrink in February.

The utilities industry saw the smallest gain, while information businesses shed 2,000 payrolls through the month.

Here are the sectors that added the most jobs in March.

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