Hiring surge in October set record, but Memphis job market could cool | Evanoff

Greater Memphis employers filled 10,200 open jobs in October, a hiring surge that marks a steady recovery from the mass layoffs in the spring set off by pandemic-related business shutdowns.

A new survey of employers shows by the end of October the region had recovered about 50,000 of the 70,300 jobs lost between March and April, with October bringing the largest hiring surge of any month — 10,200 more jobs on payrolls than in September.

Never have over 10,000 new jobs emerged in metropolitan Memphis in a single month compared to the preceding month in 30 years of labor market reports compiled by the U.S. Bureau of Labor Statistics.

BLS’ latest data on hiring, considered the most reliable yardstick of the job market, was released recently and could be the high point for the year. Results from the November survey are expected in late December and could find a slowdown in hiring after steady growth through summer and autumn.

Why a slowdown?

Greater Memphis’ $71 billion economy and particularly the all-important logistics sector tends to rise and fall with overall consumer spending in the country. The widely-watched University of Michigan Consumer Sentiment Index slipped in November. While the slip was modest, analysts keyed in on three reasons for a darkening mood.

Coronavirus infection rates and related COVID-19 fatalities soared nationwide. Unemployment claims rose. President Donald Trump’s administration filed lawsuits in several states contending the presidential election tallies were rigged.

“Rising unemployment claims and falling consumer sentiment may be the first signs that the virus surge is having a real impact on the economy,’’ Philadelphia-area economist Joel Naroff wrote last week in a letter to investors and clients that touched on the Nov. 3 election.

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Naroff noted the consumer index eased only moderately, but an element in the index called consumer expectations for the future led the decline and could signal a troublesome cutback ahead in spending.

“I am not sure how to read the consumer optimism/expectations numbers at this time,” Naroff’s letter says. “The election and its bizarre aftermath, where one group is convinced there was massive voter fraud and the other group is convinced that those who believe those claims are massively insane, makes it likely we are seeing political reactions that in the past rarely led to any real economic follow through. Indeed, the (University of Michigan) report noted that: ‘For the first time since Trump entered office, Democrats rather than Republicans held a more optimistic economic outlook.’ But people also did indicate they are being affected by COVID, so there are some real concerns out there — and there should be.

“With virus cases at record highs,” Naroff went on, and “with Thanksgiving likely to worsen things and with hospitalizations and deaths surging, mass vaccinations of the population cannot come too soon. But it will be months before that happens and in the interim, restrictions are likely to accelerate, even in states that were unwilling to do anything in the past. Those restrictions may not happen until their hospitals run out of room and deaths jump, but that, unfortunately, looks like it is coming.”

Changing COVID-19 restrictions and a changing economy 

Whether those restrictions trigger a drop in consumer spending isn’t clear. The jobless rate, 8.9% in September in metro Memphis, has plunged from July's 13.1%, the highest unemployment rate measured here since the 1930s. (September is the latest month for the jobless rate, which is compiled from a household survey separate from the employer survey).

Area employers have been hiring all summer and autumn despite headwinds in the U.S. economy. Sales of new autos nationwide, long considered a benchmark of overall economic health, were down about 9% in the July-August-September quarter compared to the same months a year ago. Now Naroff's report identifies another possible headwind — more social distance measures enacted in cities around the country. 

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Probably, we won't see another round of layoffs like last spring. Back then, Greater Memphis’ mass layoffs followed orders by governors and mayors to close non-essential businesses in a bid to stop the virus from spreading in crowded places such as bars, restaurants, hotels, stores and offices.

When the orders were lifted in May and June, employers began to bring back workers. At the low point in April, only 583,900 jobs were filled  By October, 634,400 full- and part-time jobs were in place in metro Memphis, compared to 654,200 in March before the layoffs began.

Hiring also ticked up in other cities around the country. But Naroff's report touches on a disturbing trend. As the labor market improved, fatality rates attributed to the coronavirus and its related COVID-19 infection rose around the nation.

In Memphis and Shelby County, home to about 930,000 residents, 10.2 people had died of the COVID-19 infection for every 100,000 total residents, including sick and healthy people, by May 26.

The COVID-19 fatality rate had climbed to 48.9 deaths per 100,000 residents in the county by Sept. 26, according to a database compiled by researchers at Carnegie Mellon University in Pittsburgh. By Oct. 26, the death rate had reached 60.3 per 100,000 residents. By Nov. 26, the fatality rate was 70.2 per 100,000 residents.

As the death rate climbed during the autumn, Kelsey Martin Dees saw the issue up close. Advance Memphis, where she works, idled its face shield assembly line during the summer after commercial orders for the shields dropped. About 200 currently sit in storage awaiting orders as she searches for customers.

“Honestly I think people are over COVID,” Dees said last month. “They went from guarding against it to it seems like this is like the new normal.’’

When she said that, face masks were worn in public by about 88% of the residents in Shelby County, according to Carnegie Mellon's database. As the virus surged in the autumn, Carnegie Mellon noted rising mask use across the nation and in Shelby County, where 91.6% of residents wore the masks in public all or part of the time on Oct. 26, and 94.5% on Nov. 26.

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Most cities in the nation have experienced rising fatality rates. Most cities have experienced rising mask use. What comes next? Naroff figures “restrictions are likely to accelerate.”

At the same time, consumers may be unlikely to spend heavily on the holidays. Online retailer Amazon concluded its Prime Day sales event in October. Consumer spending was heavy. Notes Naroff:

"Households may have done their holiday shopping that week, so don’t assume spending will be great this year. One reason for concern was the sharp drop in disposable (after-tax) income. The big decline was in government assistance and there is no reason to think another stimulus bill will be coming anytime soon.  Worse, it is unclear how much additional spending can pass the Senate, so we could have a either gridlock or a disappointing new round of stimulus. Consequently, the income just may not be there to spend a lot this holiday season."

Ted Evanoff, business columnist of The Commercial Appeal, can be reached at evanoff@commercialappeal.com and (901) 529-2292.