Federal Reserve sees modest pickup in hiring this month
WASHINGTON (AP) – The Federal Reserve says there are signs that recruitment has increased in recent weeks, although the pandemic continues to hurt the job market.
In its semi-annual monetary policy report released on Friday, the Fed said it had been watching job data compiled by payroll processor ADP. The Fed made its own measurement of recruitment using the ADP data and found the meter to be an accurate match for the government’s monthly employment reports throughout the pandemic.
“The ADP data shows that employment improved slightly through early February,” the Fed report said. The measure also shows that the ailing leisure and hospitality industry – which includes restaurants, bars, hotels and entertainment venues – has created new jobs again after a “temporary downturn” at the end of last year.
The Fed has increasingly turned to non-government sources of economic data in recent years for faster, more up-to-date analysis of the economy. In its report, the central bank said this proved particularly useful during the pandemic, given the speed of the recession that shed 22 million jobs in just two months this spring. Only 55% of these jobs were restored.
The report will form the basis for what US Federal Reserve Chairman Jerome Powell will testify next week to House and Senate committees.
Hiring has stalled in the past three months. From November to January, an average of just 90,000 people were hired per month. And the Fed’s report underlined that the labor market is far from what the central bank sees as “full employment.”
Approximately 4 million Americans have been unemployed since the pandemic started, meaning they are no longer working or looking for work. Powell previously stated that with an unemployment rate around 10%, the unemployment rate would be.
Still, Fed officials believe the economic outlook for later this year has brightened, according to the minutes of their January meeting released on Wednesday. The distribution of vaccines and the adoption of a $ 900 billion economic rescue package late last year have improved the outlook for the economy, the protocol said.
Eric Rosengren, president of the Federal Reserve Bank of Boston, one of the Fed’s 12 regional banks, echoed this view in a speech at the Yale Economic Development Symposium on Friday.
“A successful launch of vaccination by mid-summer suggests that a robust economic recovery should be underway by the second half of this year,” Rosengren said in prepared remarks.
In a separate section of its semi-annual report, the Fed also outlined changes in its thinking that have made it more committed to lower unemployment and less emphasis on potential inflation threats.
“Economic performance over the past few decades, including during previous economic expansion, has shown that a strong labor market can be sustained without causing an undesirable spike in inflation,” the Fed said.
In 2019, the unemployment rate fell to a 50-year low of 3.5% with no sign of inflation. Powell and other Fed officials have cited this trend as a justification for keeping rates low until attitudes have fully recovered. The Fed has pegged its short-term rate at near zero since March last year, when the pandemic deepened.
Previously, Fed officials often found it necessary to raise policy rates when the unemployment rate neared their estimate of maximum employment, only in the prospect that inflation would rise soon. The Fed’s policy now is not to raise interest rates until inflation has sustained its target of 2%.