Now Trading: Loomis Sayles Global Equity Fund (Quoted Managed Fund) ASX:LSGE Find out more

The United States has finally reported strong gains in payrolls after months of sluggish growth. However, in my view, the employment picture remains disappointing. Total non-farm payrolls have only recovered about 75% of the jobs lost during the pandemic.[i] The graphic below shows just how much payrolls have recovered from the steep losses during the pandemic, including a breakdown by sector.

The pandemic’s lingering effect on employment
I see three pandemic-related factors that have been holding back employment in the US.

1) Enhanced unemployment benefits. Some workers could be delaying a return to work while enhanced federal unemployment insurance remains available. Because the enhanced benefits are mostly tax-free, in some cases, they could generate a higher income than paid work that is subject to taxes. However, many states have started to curtail their participation in the federal program, which should help boost payrolls going forward.

2) Fear of infection. COVID-19 is still around and many people may fear infection. Vaccinated or not, the fear of infection (or transmitting the infection to a loved one) may keep some people from taking job offers, especially for jobs that involve a lot of close interaction with other people.

3) Worries about childcare. Some parents are not likely to return to work until they feel schools or childcare facilities will remain fully open for in-person attendance.

I expect these factors to wane in the coming months, leading to a boost in payroll gains in August and September. Enhanced unemployment benefits for all states will expire after Labor Day. Despite fears about the delta variant, schools and childcare facilities around the country are preparing to fully open for the next school year.

A measure of the economic recovery
Employment is a key measure of the US economic recovery. The Federal Reserve has stated that it wants the US to reach full employment before it hikes interest rates. Going forward, I’ll be watching initial jobless claims and high-frequency data (such as mobility and credit card data) to confirm the recovery remains on track. Employment data is likely to be volatile, but I expect it to continue its long-term upward trend.

The information in this article is provided for general information purposes only and does not take into account the investment objectives, financial situation or needs of any person. Investors Mutual Limited (AFSL 229988) is the issuer and Responsible Entity of the Loomis Sayles Global Equity Fund (‘Fund’). Loomis Sayles & Company, L.P. is the Investment Manager. This information should not be relied upon in determining whether to invest in the Fund and is not a recommendation to buy, sell or hold any financial product, security or other instrument. In deciding whether to acquire or continue to hold an investment in the Fund, an investor should consider the Fund’s Product Disclosure Statement, available on the website or by contacting us on 1300 157 862. Past performance is not a reliable indicator of future performance. Investments in the Fund are not a deposit with, or other liability of, Investors Mutual Limited and are subject to investment risk, including possible delays in repayment and loss of income and principal invested. Investors Mutual Limited does not guarantee the performance of the Fund or any particular rate of return.

Stay up to date
with Loomis Sayles


Register to receive regular performance updates and regular insights from the Loomis Sayles investment teams, featured in the Natixis Investment Managers Expert Collective newsletter.

Loomis Sayles marketing in Australia is distributed by Natixis Investment Managers, a related entity. Your subscriber details are being collected on behalf of Loomis, Sayles & Company, and Investors Mutual Limited (the RE for Fund) by Natixis Investment Managers Australia. Please refer to our Privacy Policy. Natixis Investment Managers Australia Pty Limited (ABN 60 088 786 289) (AFSL No. 246830) is authorised to provide financial services to wholesale clients and to provide only general financial product advice to retail clients.