Payroll employment rose by 148,000 in December, which on the surface looked like a miss but the fourth quarter was the strongest of the year with the addition of 611,000 new jobs; it was the second-strongest quarter for employment in the last two years. Read More »
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Payroll employment rose a more-than-expected 228,000 in November. The largest increases occurred in health care, professional services and manufacturing. Gains in health care and professional hires were concentrated in low-wage areas, which include support staff and non-doctor health care providers. That marks a shift from earlier in the year when much of the hiring in professional services was for new college graduates who are higher on the wage scale. The increase in administrative help reflects the expansion of offices; this is an area where employment agencies have reported shortages.
Our forecast shows payroll employment rising by 170,000, a sharp slowdown from June and July. August tends to be a weaker month despite efforts by the Bureau of Labor Statistics (BLS) to smooth the seasonal adjustment. Hiring associated with the start of the school year may affect the August data; substitute teachers are particularly scarce this year. Vehicle production has been cut, which will curtail the usual rebound in August from July plant closings.
Solid Job Gains As Labor Shortages Intensify
We expect payroll employment to increase by 180,000 in July after jumping 222,000 in June. A slowdown in employment in the government sector accounts for much of the deceleration.
Payroll employment surged 222,000 in June on the heels of upward revisions to the last two months. A surge in government hiring added more than 35,000 to those increases. That is the largest increase in government payrolls since March 2016. Hiring was strongest at the local level where coffers are filling again.
In the private sector, gains were concentrated in the service sector. A jump in health care employment dominated that improvement. However, the pace of hiring in the health care sector has slowed in 2017 relative to 2016 with growing uncertainties surrounding the fate of health care coverage.
Hires in the food sector were robust, suggesting that automation may be slower to replace workers than some have expected.
Shortages and Uncertainty Constrain Hiring
Payroll employment is expected to rise by 145,000 in June, a moderation from the 160,000 pace of the first five months of the year. Private sector payrolls are expected to account for 140,000 of those gains. The threshold to keep the unemployment rate stable is 100,000 per month or slightly less. Gains significantly above 100,000 could theoretically push the unemployment rate down if participation does not move.
Payroll employment disappointed by rising a tepid 138,000 in May after gains were revised sharply lower for the previous two months. The composition of new jobs was bifurcated with the strongest gains in higher paying professional, technical fields and lower paying food services. The increase in professional hires reflects strength in the recruitment of college graduates, although the bulk of those increases is not expected to show up until June. We saw a rebound in administrative staffing and temporary hiring in May. The expansion in food services jobs was the fastest since last August, suggesting that automation is not yet the universal job destroyer predicted by some, even as minimum wages have risen.
Health care employment remained a driver of overall gains, but hiring has slowed considerably from last year’s pace, dropping by one-third on average this year.
Payroll employment is expected to rise by 145,000 in April after slowing to less than 100,000 in March. Government employment is expected to shave about 10,000 from the top with a hiring freeze at the federal level taking a bite out of gains. That puts private sector new hires at 155,000, which is solid but not spectacular. The good news is that we don’t need as much in terms of employment gains as we once did to keep the unemployment rate relatively stable. There just are not as many people to absorb as there once were since more baby boomers are retiring and immigration is slowing. Unemployment is expected to edge up slightly to 4.6% after hitting a low of 4.5% in March. A small increase in the number of people participating in the labor force is the primary reason.
Professional hires, which tend to show strong gains in April, are expected to be remain robust. Recruiting on college campuses continues to pick up while entry-level wages for new college graduates are firming. We see recent reports of employers complaining about the quality and readiness of college grads as good news because it suggests they are dipping deeper into the pool of college grads to hire up.
Another sign of how much labor markets are tightening is scattered talk I have heard from larger employers
Payroll employment jumped by 235,000 in February. Construction alone accounted for almost a quarter of those increases, reflecting the unseasonably mild winter weather; projects usually shelved during the winter months were completed. Manufacturing also posted strong gains during the month, with food processing and machinery leading the way. Some of that stems from the rebound in investment in the shale industry. Mining employment posted solid gains of 8,000. Job creation related to the rebound in the oil sector shows up mostly in the manufacturing, rail and trucking industries. One exception in manufacturing: The vehicle sector, which had been a bright spot, shed 3,500 jobs as sales slackened.
Private education employment surprised to the upside in February, This category includes a broad spectrum of training and educational institutions, including online education, and indicates some willingness to train workers for specific jobs.
Payroll employment jumped a more-than-expected 227,000 in January after significant net downward revisions to the previous two months. The number of retail jobs expanded by nearly 46,000 during the month, despite pressure from consumers shifting away from bricks to clicks. The bump in retail jobs reflects a quirk in the seasonal adjustment of the data.