The table is set for ‘a blockbuster fall.’ Unless COVID-19 whipsaws the economy once more

The improving economy has produced some good news.

According to researchers at the Federal Reserve Bank of Dallas, Texas expanded at a robust pace in July despite supply chain disruptions and hiring issues. In a survey of executives in Texas, sales reported over 35% higher than usual sales for a typical July, significantly more than earlier this year. And the business outlook reflects broad optimism and high growth expectations for the fall, researchers wrote.

Then the federal government reported that employers created 943,000 jobs in July, the largest monthly increase since August 2020. The job gains for May and June were also revised upwards by 119,000, which significantly increased the average number of new hires for the past three months .

“This is the job report we’ve been waiting for – and hoping for,” said Jay Denton, chief analyst at ThinkWhy, a Dallas software services company that tracks employment trends.

But the pandemic always seems to intervene. The Delta variant has boosted hospital admissions and made Texas a hot spot again. Once again, Texan hospitals could be overrun by COVID-19 cases, and the governor has asked providers to postpone elective surgeries.

Schools and colleges are opening up, bringing additional risks to public health and the economy: “Let’s just hope we deal with the virus better than we have in the past,” Denton said.

The number of vacancies topped the 10 million mark at the end of June, a new high, the government announced on Monday. That means the economy and labor market have ample opportunities for growth, which is important given that U.S. jobs are still 5.7 million below pre-pandemic levels.

In the same report, new hires exceeded job vacancies for the first time in seven months, suggesting an improvement in labor shortages.

“People were starting to feel more comfortable returning to normal – summer vacation, personal travel, dining out,” said Denton. “We thought it could be a blockbuster decline in terms of job gains. Obviously some of it is now in danger. “

Others were more open about the roller coaster recovery.

“I’ve given up even thinking about feeling good,” said Michael Davis, who teaches economics at Southern Methodist University’s Cox School of Business. “It’s the same thing we’ve been saying for months, tell me what the pandemic will do and I’ll tell you if you should feel good” about the economy.

Over 8.7 million people were unemployed in July, 3 million more than before the pandemic. With a record number of job vacancies, this equates to a little more than one vacancy for any unemployed worker.

In some industries, labor imbalances are more severe. In professional and business services, a major strength in Dallas-Fort Worth, there were nearly two jobs for every unemployed worker.

Employers have raised wages and offered bonuses, and the average hourly wage has increased 4% year over year. This is expected to help draw back some of the 3.1 million people who stopped looking for jobs after the pandemic hit.

“Looking ahead, buoyant labor demand should be offset by increasing labor supply as individuals gradually return to work, although the rapid spread of the delta coronavirus variant risks delaying return,” Lydia Boussour wrote, senior US economist for Oxford Economics, a research and forecasting company.

Monthly job openings were 44% higher than before the pandemic, while the number of new hires was 12% higher, she wrote. This is further evidence of the difficult job market for employers.

In the Dallas Fed poll, two topics dominated comments from Texas executives: supply chain disruptions and hiring issues.

“It’s almost like they feel like we don’t understand how serious it is – the shortage of raw materials and the shortage of inventory,” said Yichen Su, Dallas Fed research economist and co-author of the report Texas’ growth.

“Material prices and availability are getting worse,” said a senior executive in plastics and rubber manufacturing. “We receive almost monthly price increases from some of our suppliers.”

Many executives believe the generous unemployment benefits kept job candidates at home. Governor Greg Abbott closed the federal supplement in late June, but companies were still struggling to hire new employees in July.

“We expected at least some change, but the change wasn’t very big,” said Su in the polls. “They’re still complaining about it [workers] are hard to find and people are still quitting. “

Just over two-thirds of managers said they were trying to hire new employees. And three quarters of them cited the lack of applicants as a major obstacle – far more than those who wanted more money.

A HR services executive said the company plans about 10 confirmed interviews and only 30% appear on average.

“If we hire, there is a 95% chance that new hires won’t last a month,” said the manager.

Economists are trying to find out why millions aren’t applying for so many vacancies and why nearly a record number have quit their jobs in the past few months.

“During the bad days of COVID, people really had a chance to reevaluate where they were,” Davis said. “A lot of people might say, ‘Okay, life is too short to live like this.’ ”

Texas usually outperforms the nation in job growth and other economic measures, but its unemployment rate was higher than the US rate during the pandemic – and higher than many of its major rivals in the south, including Georgia, North Carolina, and Florida.

Texas’ famous bragging rights couldn’t keep up with the moment, Davis said, especially as rising COVID-19 cases keep the state from keeping up with the recovery.

“We’re not bulletproof, and we’re not smarter, harder-working, or better organized than the rest of the country,” said Davis. “And we should acknowledge that too.”

Workers with H-2B visas beautify an entrance area of ​​a neighborhood in North Texas.  Companies use the visas to recruit seasonal workers for landscaping, food prep, construction, and other manual jobs.  In 2019, Texas led all states with over 16,000 H-2B certified positions.According to a survey, more than half of Dallas office workers have returned to work, one of the highest in the country.  But the rising Delta variant is pushing some companies to postpone their return and consider the need for vaccines and masks.

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