The June jobs report will offer a reading on economic momentum.
“This is a trickier phase of the recovery” in the labor market, one economist said.
Daily Business Briefing
July 2, 2021Updated July 2, 2021, 7:59 a.m. ETJuly 2, 2021, 7:59 a.m. ET
“This is a trickier phase of the recovery” in the labor market, one economist said.
More than 100,000 restaurants received relief grants, but 265,000 were turned away.Here’s what’s happening in markets before the jobs report.Available office space in Manhattan climbs to another record high.Catch up: Robinhood lost $1.4 billion in the first quarter, its I.P.O. documents show.
The leisure and hospitality sectors suffered the biggest job losses from the pandemic.Credit…Karsten Moran for The New York Times
The latest clues to the state of the nation’s economic recovery will come Friday morning when the Labor Department releases its June jobs report.
Economists expect payroll gains to top 700,000, an increase from the 559,000 announced for May. Analysts surveyed by MarketWatch predict that the report will show the unemployment rate declining to 5.6 percent from 5.8 percent.
The report follows several promising economic developments this week. Consumer confidence, which jumped in June, is at its highest point since the pandemic’s onset last year. Stocks closed out the first half of the year at record highs, and businesses’ plans for capital investments are rising. The Congressional Budget Office said Thursday that the economy was on track to recover all the jobs lost in the pandemic by the middle of next year. And the budget office and the International Monetary Fund both projected U.S. economic growth at or near 7 percent for the current year, the biggest increase since 1984.
Still, Sarah House, a senior economist with Wells Fargo, noted, “This is a trickier phase of the recovery.” Last year, millions of workers were only temporarily laid off and able to slot back into their previous positions with little delay once reopening began.
Now, employers and workers are “having to make new matches and new connections and that just takes more time,” she said.
Economists also point to a widespread reallocation of labor — like rounds of musical chairs on a mammoth scale — in which workers are re-evaluating their options. During the pandemic, many workers who had held restaurant and retail jobs may have taken positions in warehouses and manufacturing plants.
At the same time, the appetite for pandemic-driven jobs such as couriers and grocery store workers are ebbing as other sectors like leisure and hospitality ramp up.
“Today there are more job openings than before the pandemic and fewer people in the labor force,” said Becky Frankiewicz, president of the staffing company ManpowerGroup North America.
“The core challenge now is enticing workers back to the work force,” she said.
Governors in 26 states have moved to end distribution of federal pandemic-related jobless benefits even though they are funded until September, arguing that the assistance — including a $300 weekly supplement — was discouraging people from returning to work.
The June figures won’t reflect the cutoff’s impact on hiring because the Labor Department’s surveys of establishments and households were done the week that ended June 12, before any states halted federal benefits.
Recruiters have not seen a pickup in job searches or hiring, though, in states that have since withdrawn from federal programs. “I would have expected to see more people engage at a higher rate in the work force when the federal subsidies were ended,” Ms. Frankiewicz said, “We have not seen that correlation yet.”
The online job site Indeed surveyed 5,000 people in and out of the labor force and found that child care responsibilities, health concerns, vaccination rates and a financial cushion — from savings or public assistance — had all affected the number of people looking for work. Many employers are desperate to hire, but only 10 percent of workers surveyed said they were urgently seeking a job.
And even among that group, 20 percent said they did not want to take a position immediately.
Analysts expect that the largest payroll gains will be in the leisure and hospitality sectors, which were also the hardest hit during the pandemic.
They also cautioned that the Labor Department’s estimates could be affected by seasonal adjustments. For example, there is normally a large drop in the number of teachers when schools let out for the summer. Accounting for that traditional decline, though, may be complicated by the fact that not as many educators were working because of pandemic-related school closings.
Tamra Patterson, the owner of Chef Tam’s Underground Cafe in Memphis, received funding in May. She immediately hired more workers and gave her employees a raise to $16 an hour.Credit…Whitten Sabbatini for The New York Times
More than 370,000 restaurants applied for more than $75 billion in funding from the Restaurant Revitalization Fund, nearly three times what the program had available. Around 105,000 businesses were approved for grants, which averaged just over $272,000.
The Small Business Administration, which runs the Restaurant Revitalization Fund, told unsuccessful applicants in an email that it was unable to fund all qualified applications because of “overwhelming demand.”
The restaurant fund, which opened in May, started off smoothly but was mired in turmoil in its final weeks, with thousands of grants rescinded because of policy changes and thousands more stalled by delays and glitches. Applicants awaiting decisions grew increasingly desperate as the remaining funding dwindled, Stacy Cowley reports for The New York Times.
When Congress created the restaurant fund in March as part of the Biden administration’s $1.9 trillion American Rescue Plan, it ordered the Small Business Administration to put a priority on funding for businesses owned by women, people of color and military veterans.
But with demand far outpacing the money available, that approach risked leaving all applicants outside the priority groups empty-handed. Several white business owners sued, and federal judges ruled that they were likely to succeed in proving their claims that the program’s policy violated the Constitution’s equal protection clause. In response, the S.B.A. ended the policy and rescinded the awards of nearly 3,000 priority applicants who had been told they would receive grants.
For those who got grants, the money was often a lifeline. Tamra Patterson, the owner of Chef Tam’s Underground Cafe in Memphis, received funding in May. She immediately hired more workers and gave her employees a raise to $16 an hour.
“This literally resuscitated my business,” she said. “This past year has been like sucking air through a straw in the middle of the ocean. This finally let us breathe.”
The pace of hiring has fallen below economists’ expectations for the last two months amid a bumpy economic recovery.Credit…Frederic J. Brown/Agence France-Presse — Getty Images
U.S. stock futures were slightly higher on Friday as traders awaited signs of how the American economic recovery was progressing from the latest monthly jobs report from the Labor Department. For the past two months, the pace of hiring has fallen below economists’ expectations amid a bumpy recovery.
Economists surveyed by Bloomberg expect payroll gains of 720,000, an increase from the 559,000 announced for May.
Investors will be watching the data closely as they try to work out how and when the Federal Reserve will begin to taper its pandemic stimulus measures. The central bank has a mandate to support full employment but also to keep prices stable. Recently, inflation has jumped because supply and demand have become mismatched as businesses reopen. Fed policymakers have said they believe rising price pressures to be temporary, but investors are wary of a change in policy stance.
The S&P 500 index is expected to open 0.1 percent higher when trading begins. This week, the index has risen 0.9 percent. The yield on 10-year U.S. Treasury notes fell two basis points, or 0.02 percent to 1.44 percent, the lowest level in three weeks.
Elsewhere in markets
Most European stock indexes were higher. The Stoxx Europe 600 rose 0.4 percent on Friday but was set to end the week slightly weaker than last Friday.
Shares in Virgin Galactic soared 31 percent in premarket trading after Richard Branson said he planned to go on the next test spaceflight on July 11, nine days before Jeff Bezos takes off with his own space company.
Oil prices slipped. West Texas Intermediate, the U.S. crude benchmark, fell 0.1 percent to $75.18 a barrel. Still, it was near its highest price since late 2018 after officials from OPEC, Russia and their allies failed to reach agreement on Thursday on whether to ease the output quotas. They will meet again on Friday afternoon. Brent crude, the international standard, fell 0.2 percent to $75.73 a barrel.
A third of leases at large Manhattan buildings will expire over the next three years, according to analysts, and companies have made clear they will need significantly less space. Credit…Vincent Tullo for The New York Times
Even as many companies bring workers back to their offices this summer, the amount of office space available for lease in Manhattan has soared to the highest rate on record.
Across Manhattan, home to the two largest business districts in the country, 18.7 percent of all office space is available for lease, a jump from more than 15 percent at the end of 2020 and more than double the rate from before the coronavirus pandemic, according to a report released on Thursday by Newmark, a real estate services company.
Some neighborhoods are faring worse, such as Downtown Manhattan, where 21 percent of offices have no tenants, the company said.
The overall availability rate is the highest since it started being tracked in the mid-1970s, when the city was facing a financial crisis and the Manhattan skyline was being transformed by the rise of towering office buildings like the Twin Towers at the World Trade Center.
Despite some positive economic indicators, companies in New York City continue to end their leases or offload them to other tenants at a steady pace, underscoring that the tremendous shifts in the way people work have already become a lasting legacy of the pandemic.
The real estate firm Savills said the Manhattan office market was not likely to rebound to prepandemic levels until “late 2022 or beyond.”
No city in the United States must confront the changing workplace more than New York, where offices before the pandemic attracted 1.6 million commuters every day and helped sustain a swath of the economy including shops, restaurants and Broadway theaters. The pandemic has also placed monumental pressure on the real estate sector, a pillar of the New York economy, as landlords have rushed to redesign offices and dangle incentives like lower rent to retain and attract companies.
But there are signs things could get worse for landlords. A third of leases at large Manhattan buildings will expire over the next three years, according to the real estate firm CBRE, and companies have made clear they will need significantly less space.
At the end of May, just 12 percent of Manhattan’s office workers had returned to their desks, according to a survey of companies by the Partnership for New York City, an influential business group. More than 60 percent of workers are estimated to return in September, the group said, but many companies will allow their employees to work remotely at least several days a week.
Vlad Tenev, Robinhood’s chief executive.Credit…Financial Services Committee
Robinhood, the stock-trading app that grew in popularity and notoriety during the pandemic, revealed skyrocketing revenue and a loss of more than $1.4 billion in the first three months of this year, as it took a key step on Thursday toward one of the year’s most anticipated initial public offerings. Its offering prospectus offered the first full look at the company’s financial performance. Nearly 18 million people now use Robinhood’s app to buy and sell stocks and cryptocurrencies, with $81 billion in assets under its custody. In 2020, Robinhood eked out a profit of $7 million. It reported profits in two out of the last nine quarters.
An effort to push the most sweeping changes to the global tax system in a century gained significant momentum on Thursday when 130 nations agreed to a blueprint in which multinational corporations would pay an appropriate share of tax wherever they operate. The result of the negotiations, overseen by the Paris-based Organization for Economic Cooperation and Development and revived this year by President Biden, is also remarkable because it includes China, Russia and India among the signatories — large economies that had been wary of a tax overhaul.