“The labor market recovery still has legs but it’s likely going to be an uneven path going forward,” ADP chief economist Nela Richardson told reporters on a press call Wednesday, pointing to the Covid-19 variants, labor shortages and supply chain bottlenecks.
“We do expect job gains to continue but we are aware that in the near-term there are some challenges that are unprecedented,” Richardson said. “The overall take-away is this recovery is happening, but its path is just something we’ve never seen before.”
For Friday’s jobs report, due at 8:30 am ET, economists polled by Refinitiv forecast 870,000 jobs were added in July, a slight downward shift after forecasts topped the 900,000 mark last week.
The nationwide unemployment rate is expected to be 5.7%.
Not a typical summer
The July report could also be subject to some seasonal weirdness, warned ZipRecruiter labor economist Julia Pollak.
In a normal July, school and university workers take a summer break, which shows up in the data. But this year, layoffs in education were likely much lower than normal because so many workers were let go last year due to the pandemic. Meanwhile, other parts of the economy — such as the services sector — are still adding back the millions of jobs lost in 2020. This could mean seasonal adjustments might distort Friday’s data, Pollak said.
But she is also looking for some improvement in the labor force participation rate, given recent increases in online job search activity.
Meanwhile, claims for unemployment benefits have remained stubbornly high throughout the summer. Inching up and down from week to week, claims have remained close to the 400,000 mark. This underscores the lingering uncertainty in the labor market even as businesses are hiring and more people get vaccinated, Richardson said.