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U.S. Employment Situation
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When is it coming? part deux
Last month in this space we discussed the next recession. Have no doubt that there will be one -- there's no issue as to the "if," but opinions abound as to the "when." As one of the members of our editorial advisory board mentioned to us, "Economists are no better than anyone else at guessing the timing of business cycles ... well, maybe a little better -- but not much." This month we will expand on the current state of the employment economy and will look for further signs if a recession is somewhere on the horizon.
Here is our interpretation of a Beveridge Curve, which we have discussed several times in this space (April 2012, November 2013, and most recently in February 2015). We keep coming back to it because rarely do we see such symmetric relationships between data for different metrics. And we like symmetry.
About a year prior to the last recession, the two data series started to diverge -- the unemployment rate started to inch up as the job vacancy rate started to sink and this movement accelerated throughout the recession. Move forward to the current economic cycle, the two series continue to converge -- the job vacancy rate continues to rise as the unemployment rate declines. If the pattern holds true for the next recession as it unfolded for the last recession, then the next recession is likely no sooner than one year away -- and very well could be longer.
Unfortunately, the job vacancy rate data series only began in December 2000, so our premise of how these two data series could be predictors to an economic slowdown or recession is quite limited. Although the two data series appear to be approaching a point when the two trend lines cross -- and hence begin to diverge instead of continuing to converge -- that could very well be a "red herring" because each data series would not be changing directions as they did prior to and during the last recession.
However, if the two data series should cross that could be an indication of stronger wage inflation as it would mean that there is a higher rate of job vacancies than unemployed people available to fill them. Actually, it would likely mean that there are clearly not enough people with the proper skills to fill the existing job vacancies and that would indeed drive up wages and hence inflation would become more severe.
But there are at least two other "howevers" regarding how tight the labor market actually is today with unemployment at a level that many once considered "full employment." First, the last time the unemployment rate was 5.0 percent was in early 2008 and the labor force participation rate was more than 66.0 percent; in September 2015, the unemployment rate was 5.1 percent, the labor force participation rate was 62.4 percent, and this could suggest a labor market with a lot more slack today and hence not a lot of pressure building for higher wages. Second, the growing use of telework and outsourcing mean less regionally restrictive labor markets muting some wage increases. For example, if a skill shortage starts to significantly drive up wages in a certain market, today some employers can hire workers who may be available in a different geographic market without such a shortage via telework and without necessarily increasing their wages.
BTW, our editorial review board member went on to explain that "the when [the next recession will occur] is not as important as to the why." We will hold that discussion for another time.
OurTemporary Help Services Interactive Data Book tool will enable to view the local (down to the county level) temporary help services trends as well as benchmark your local staffing operation to discover exactly where you are positioned in the market and if your offices are performing up to the local market.
Then use ourEmployment Tracking Tool that is designed to assist you in identifying and evaluating new sectors and markets. It examines the overall employment trends by industry in the given market to help determine possibly under-serviced industries to target marketing efforts (as well as what industries to avoid). By doing this, it shows what industries are growing and therefore are in expansion mode making them eager for a wide variety of products and services and likely in need of additional staff.
What will 2022 look like for staffing services?
The U.S. Bureau of Labor Statistics recently published 10-year employment projections. These projections are based upon a plethora of criteria including how changes in population demographics will affect the demand for specific goods and services, the types of jobs, and levels of education for workers to fill those jobs. Our report highlights some of the changes in the direction that both jobs (occupations) and well as employment changes by industry and sector that may be of special interest to staffing industry executives planning for the near-term future.
You may be surprised to learn that it appears that light industrial will be a growing sector for staffing services encompassing growing portion of staffing services jobs by the year 2022; office and administrative support jobs, although they will remain a significant part of staffing services jobs, will decline slightly as its portion of the overall mix.
Our report on the expected employment projections to the year 2022, which is only seven years away, as they relate to staffing services to assist you in planning for the future. Given the highly analytical nature of our readers and followers, this brief, eight-page report is light on words but heavy on tables and charts. And because we know you are a busy executive, you don't even have to go to the additional step of requesting this gratis and valuable report from us. Just directly download it from here.
Looking for more? Check out our podcasts!
Podcasts of the current employment situation will be available by 4:00 p.m. ET, Friday, May 8. The video podcast, which you can start and stop to study the tables and graphs as well as replay individual sections, includes additional data and information. Watch the video version here or just listen to the audio version here (no special hardware or software required), which also can be downloaded to an iPod or any smartphone.
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September 2015 Employment Report
Total nonfarm jobs were up only 142,000 in September (only up 118,000 when government jobs are removed) and that was pretty weak, which was the same thing we said about last month's numbers. Moreover, August's job numbers were revised downward by 37,000 for total nonfarm and downward by 40,000 for private sector jobs.
On the other side of the monthly employment situation, the unemployment rate was unchanged at 5.1 percent for September; a year ago it was 5.9 percent. The ability of the unemployment rate to stay at 5.1 percent was due to some relatively large movements -- and eerily coincidental -- in the figures that are used to calculate the unemployment rate. Briefly, although the number of employed persons declined and the number of unemployed also declined -- but by a lesser amount -- since the size of the labor force decreased by the sum of those two declines, the unemployment rate was unchanged; for more detail, see the "Household Survey" section at the bottom of this box.
This employment situation is likely not what the Federal Reserve Board has been looking for as it tries to find some supporting domestic data to pull the trigger to up interest rates.
Total private-sector jobs grew by 142,000 in September that was slightly better than the 136,000 it increased by in August; but as we mentioned, August was revised downward by 37,000. In other words, September's growth was better than in August, but only because August did worse than first reported.
The private Goods-producing sector contracted by 13,000 jobs in September, which was an improvement from the 22,000 decline in August. Trust us, we are not happy about saying that a 13,000-job decline is an improvement.
The picture in the private Service-providing sector was better. In September, it grew by 131,000 jobs, which was better than the 122,000 it increased by in August (not to confuse the issue too much further, August was first reported as a gain of 164,000).
Thetotal number of Government jobs was up by a total of 24,000. Although the federal government shrank by 2,000 job and Local government increased by 9,000, State government figure added 17,000, but 13,600 of that was in State government education.
Temporary Help Services Roundup
Temporary help services sector grew, but by a decelerating amount. September's 2,906,100 temporary help services jobs were a result of an increase of 4,600 jobs, which was a 0.2 percent increase from August and up 3.7 percent from September 2014. Incidentally, the decline in July, which was initially reported as down 8,900, revised last month to down 9,200, is now being reported as a decline of 11,300.
However, temporary help service's market share -- that is its portion of all jobs -- advanced a bit to 2.04 percent in September, which was a 0.0012 percentage point gain from August.
For a chart of temporary help's growth from January 1991 toSeptember 2015 and comparing its trend to total employment, click here.
(if the chartis unclear, click on it to open in a browser window)
Here are some specifics regarding September's unchanged unemployment rate of 5.1 percent.
There were 236,000 fewer employed persons in September as well as 114,000 fewer unemployed persons, the size of the labor force contracted by 350,000, so the unemployment rate remained at 5.1 percent. In addition, the number of people not in the labor force increased by 579,000. As we've seen in the recent past, the size of the labor force diminished as the number of people not in the labor force expanded.
The employment-to-population ratiodecreased to 59.2 percent in September from August's 59.4 percent but is up from 59.0 percent a year earlier in September 2014. The labor force participation rate declined in September to 62.4 percent from August's 62.6 percent. The number of discouraged workers continued to trend downward in September with 635,000 and that was down from 698,000 in September 2014.
NEXT EMPLOYMENT REPORT --FRIDAY, NOVEMBER 6, 2015
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