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A million new jobs? That’s how many Wall Street thinks the U.S. created in April

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The U.S. might have created a million-plus jobs in April as the economic recovery spread across the country and reached businesses that suffered the most in the first year of the pandemic.

Here’s what to watch in Friday’s U.S. employment report for April.

Wall Street forecast

Economists say the U.S. probably added one million new jobs last month, according to a survey by Dow Jones and The Wall Street Journal. Some Wall Street firms such as Jefferies LLC even predict net job gains could top 2 million.

Such an increase would be the largest since last summer following the end of a broad U.S. lockdown of business and consumer activity to stem the spread of the coronavirus.

Layoffs are falling and companies are rushing to hire workers in anticipation of a stronger economy in the months ahead. Demand for all kinds of goods and services are surging thanks to a waning of the pandemic as vaccines are rolled out and mammoth federal stimulus payments to Americans.

Read: Unemployment claims drop below 500,000 for first time since pandemic

Where the new jobs are

The biggest wave of hiring is taking place at restaurants, retailers, hotels, resorts, theaters, amusement parks and other service-oriented businesses that were slammed over the past year. These are what economists call “leisure and hospitality” jobs.

Government rules, social distancing and fear of catching the virus deterred most Americans from venturing out much until now. Yet with Americans feeling safer thanks to the vaccines, they are leaving their homes in droves to dine out, travel or go on vacation.

Construction firms and manufacturers are also trying to hire in a big way with business booming, but their biggest problem is finding quality workers.

Employment in education is also on the rise as more schools reopen and bus drivers, cafeteria workers and other employees return to their old jobs.

Unemployment rate

The official unemployment rate is seen falling to 5.8% in April from 6%.

That would be a pretty good number — if it were believable. The problem is, the official rate leaves out millions of formerly employed people who simply gave up looking for work. They aren’t counted if they haven’t searched for a job recently.

The true unemployment is probably closer 9% to 10%, economists estimate.

Keep an eye on the so-called U6 rate also published by the government. It stood at 10.7% in March and is also likely to fall again.

The U6 rate includes people who recently stopped looking for work as well as those who can only find part-time jobs.

The good news is, unemployment by any measure is falling and could fall more rapidly in the months to come if the coronavirus is contained.

The Federal Reserve predicts the jobless rate will fall to 4.5% by year end and many economist say it could go even lower. The unemployment rate had hit a 50-year low of 3.5% before the pandemic.

“Although unemployment remains elevated, the labor market is rapidly recovering,” said chief economist Gus Faucher of PNC Financial Services.

In the labor force or out?

A key barometer of how quickly the economy is getting back to normal is whether millions of Americans rejoin the labor force. That’s always a telling sign that many jobs are available.

The size of the labor force stood at 164.4 million before the pandemic and an average of 1.5 million people were entering it every year. In a fully recovered economy the size of the labor force would exceed 166 million.

After falling to as low as 156.5 million last year, the size of the labor force has increased to 160.4 million. Yet that still leave its well short of its precrisis trend.

Wages

The usually reliable measure of wage growth has gone haywire during the pandemic and it will probably be awhile before it becomes dependable again.

Take April. Wages are likely to decline because the rebound in hiring is happening largely in lower-paid professions that sustained the biggest job losses in the first few months of the pandemic.

Yet wages overall are not actually declining; they are going up.

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