WASHINGTON – The Federal Reserve says there's evidence that hiring has picked up in recent weeks, though the job market remains badly damaged by the pandemic.
In its semi-annual monetary policy report released Friday, the Fed said it has been watching job data compiled by payroll processor ADP. The Fed has constructed its own measurement of hiring using the ADP data, and said that gauge has closely matched the government's monthly jobs reports throughout the pandemic.
“The ADP data indicate that employment improved modestly through early February,” the Fed's report said. It also said its measure shows that the battered leisure and hospitality industry has started adding jobs again after a “temporary downturn” at the end of last year.
The Fed has in the last several years turned increasingly to non-governmental sources of economic data to get a quicker, more timely reading on the economy. In its report, the central bank said this has proved particularly useful during the pandemic given the speed of the recession, which eliminated 22 million jobs in just two months this spring. Just 55% of those jobs have been recovered.
Hiring has stalled in the last three months, with job gains averaging just 90,000 a month from November through January. And about 4 million Americans have fallen out of the labor force since the pandemic began, meaning they are no longer working or looking for work.
In a separate section of the report, the Fed also spelled out changes in its thinking that has led it to push harder for lower unemployment and place less emphasis on potential threats of inflation.
In 2019, the unemployment rate fell to a 50-year low of 3.5%, without any sign of inflation. Fed officials have pointed to that trend as justification for keeping rates ultra-low until hiring has fully recovered. The Fed has pinned its short-term interest rate at nearly zero since last March, when the pandemic intensified.
Previously, Fed officials often felt it was necessary to raise its benchmark rate when the unemployment rate neared its estimate of maximum employment.