Employment recovery may be slowing as virus cases climb

Alternative data sources that track hourly employees show a slowing of the jobs recovery in recent weeks, as the growth of coronavirus cases accelerates in major cities like Phoenix, Houston and Los Angeles. 

Data from Homebase, a scheduling firm that works with many small and medium-sized businesses in the service sector, show that employment may have declined over the past week in some areas, with fewer employees working on June 24 than the average from June 15-19 in most states.

Earlier in June, an economist at the St. Louis Fed identified Homebase as a data set that was more predictive of the surprise May jobs report than many economists. At the time, the data showed continued momentum in the weeks following the survey dates for the May employment report. 

The Homebase data is not a representative sample of the U.S. economy, but it does mirror the slowing recovery the weekly data of new jobless claims, which have slowed slightly over the past three weeks but are still at historically high levels. The most recent reading was for 1.48 million new claims, higher than economists expected, though continuing claims did fall below 20 million. 

“Albeit slow, the marginal improvement in the labor market is a positive sign we’re on the road to recovery, but the increasing claims states where virus cases are up proves there will be bumps along the way,” Charlie Ripley, senior investment strategist for Allianz Investment Management, said in a statement about the report.

Data from Kronos, another large hourly workforce management firm, has also shown a slowdown in the jobs recovery, according to Dave Gilbertson, vice president of strategy and operations for the company. Gilbertson said that in recent weeks, the pace of growth for hourly workers clocking in for their data set has fallen to half of what it was at the beginning of the recovery. 

“We did start to see a break point happen right after Memorial Day,” Gilbertson said. 

Retail, hospitality and health care are three industries that are seeing their recoveries level off, he said. Shifts worked in the Southeast have generally leveled off in the past month, though it remains to be seen if that is because of rising coronavirus cases, Gilbertson said.

“The thing we’re looking at here more closely this week and next week is trying to compare the states where there have been higher Covid spikes with where there are slowdowns, or even in some cases declines,” Gilbertson said. 

The Labor Department’s closely watched monthly employment report is being released on Thursday.

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