Latest economic data and surveys boil 2020 down to 1 metric
With Wednesday marking the close of the third quarter, the newest wave of data, as well as business and consumer surveys to surface this week, reinforced the economic focal point of 2020 — jobs.
For individuals who remain gainfully employed and firms that either retained or rehired their workers, their current state and future outlook are generally upbeat. For people out of work or companies with soft demand and revenue, their status and positions are bleak.
And now new numbers.
Private sector employment increased by 749,000 jobs from August to September, according to the September ADP National Employment Report produced by the ADP Research Institute in collaboration with Moody’s Analytics. The report, released Wednesday, is derived from ADP’s actual payroll data and measures the change in total nonfarm private employment each month on a seasonally-adjusted basis.
“The labor market continues to recover gradually,” said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute.
“In September, the majority of sectors and company sizes experienced gains with trade, transportation and utilities; and manufacturing leading the way. However, small businesses continued to demonstrate slower growth,” Yildirmaz continued in a news release.
The matched sample used to develop the ADP National Employment Report was derived from ADP payroll data, which represents 460,000 U.S. clients employing nearly 26 million workers in the U.S.
As a result, analysts determined that the August total of jobs added was revised from 428,000 to 481,000.
“One thing — and perhaps only one thing — is clear about labor market data in late 2020. There is still a tremendous amount of churn happening. We believe that through the volatility we will see a declining trend in job growth through the remainder of this year as new layoffs start to exceed the uptake of previously furloughed workers,” Comerica Bank chief economist Robert Dye said in an analysis.
Consumer sentiments
For those workers who are newly hired or who have remained employed throughout the pandemic, their outlook is upbeat based on a report from CompareCards released on Wednesday.
CompareCards, which is part of LendingTree, said nearly six in 10 credit cardholders say they are better off financially today than they expected to be when the pandemic began, although there were stark differences between responses from men and women.
The findings indicated the two biggest reasons given for being better off than expected were:
“I was worried I’d lose my job, but I didn’t,” noted by 30%
“I was furloughed, but I’ve since been brought back to work,” mentioned by 19%.
CompareCards discovered the most common reason given for saying things were not better than expected was, “I expected more help from the government,” said by 27% of those individuals, with another 21% of that category stating, “I lost my job and haven’t gotten a new one.”
That survey went on to show that nearly three in four men agreed that they were better off financially than they expected to be compared with just four in 10 women.
“Despite the disparities, the big takeaway is that most Americans do feel better about their finances than they expected to back when the pandemic took hold,” LendingTree chief credit analyst Matt Schulz said in a news release.
“That is something to applaud. We just can’t forget that there’s plenty of work to be done to ensure that the economic good feelings are felt more widely across more diverse groups,” Schulz continued.
Business outlooks
And of course, the status of employers is part of the foundation for those sentiments about stability. And separate business surveys from LendingTree and PNC Financial Services Group reinforced how crucial the Paycheck Protection Program was.
According to the latest PNC semi-annual survey of small and midsize business owners and executives, the decline in business activity over recent months forced many firms to take drastic measures through workforce reductions. PNC reported nearly four in 10 businesses have cut workers since the start of the pandemic, although for 87% of those shops, the decrease is considered temporary or a furlough.
In fact, PNC pointed out that its survey showed a majority (58%) of the businesses that had temporary layoffs or furloughs have already begun re-hiring.
The PNC survey went on to mention that nearly all operations that applied for a Paycheck Protection Program loan consider the funding important (97%), and nearly seven in 10 say it is extremely important. Of those who applied, nearly 90% were approved.
A majority (55%) say additional government stimulus funding is important for their business, with a third (32%) indicating it is extremely important, according to the PNC survey, which concluded Sept. 8.
“Business owners have learned that the previous status quo won’t work now. The majority of businesses have reconfigured their operations and for many, these changes will be permanent,” PNC chief economist Gus Faucher said in a news release. “Their confidence may be shaken, but we know through the history of this survey that business owners are resilient and they know how to adapt to change.
“After job losses of more than 22 million between February and April, by far the steepest employment downturn in history, the labor market has started to recover. The economy has added back nearly one-half of those lost jobs, but job growth will slow going forward. Unemployment will remain elevated for years to come as business owners continue to deal with the impacts of the pandemic,” Faucher went on to say.
As small business owners continue to navigate the COVID-19 crisis, LendingTree acknowledged many shops are grappling with significant new challenges.
According to a recent LendingTree survey of almost 1,400 small business owners, day-to-day business disruptions have spurred unexpected layoffs and financial concerns. In fact, nearly three-quarters of small business owners have taken on debt to make up for financial losses. And few businesses are again fully operational.
But it isn’t all doom and gloom, according to the survey, as the majority of small business owners still feel optimistic about their future beyond the pandemic.
Three key findings included:
— About 74% of small business owners have taken on debt to cope with the financial losses due to the coronavirus crisis. Most notably, 37% took on credit card debt and 28% borrowed from friends or family.
— Only 10% of small business owners who received PPP funding said it relieved all the financial difficulties they’re facing. The majority (62%) said the funds helped somewhat, but 28% said the PPP funds didn’t relieve their difficulties at all.
— Of the 79% of small business owners who suspended or reduced operations, only 13% have since been able to completely resume operations. Most (63%) have been able to somewhat resume, while 23% haven’t been able to resume operations at all.
Furthermore, 43% of small business owners said their gross revenue has decreased by 51% or more due to the pandemic.
“Only 13% of our respondents have been able to completely resume operations, which means that almost nine out of 10 aren’t there yet,” said Hunter Stunzi, senior vice president of small business and investments at LendingTree. “That’s a real drag on revenue and on their ability to keep and pay their employees.”
Of small business owners who applied for PPP funding, the LendingTree survey found that 55% received the funds they were seeking. It’s worth noting that this is far better than the 5% who received financial relief during the first round back in early April.
Nonetheless, Stunzi likened the program to a temporary Band-Aid.
“It was really sort of a one-time shot in the arm for a few months of payroll, utilities or rent,” Stunzi said in a news release. “But now that they’ve worked through that and the government has not been able to get its act together and provide more stimulus to these Main Street businesses, many are never going to return and are simply going to go out of business.”