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U.S. Employment Situation
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'Show me the slack' -- in the labor markets, that is ...
There's been a lot of talk about the 'slack in the labor markets,' so we thought we try and show it to you. In case you missed it, the labor market was the subject of the Fed's recent summit in Jackson Hole, Wyoming, where Fed Chair Yellen said, "Estimates of slack necessitate difficult judgments about the magnitudes of the cyclical and structural influences affecting labor market variables, including labor force participation, the extent of part-time employment for economic reasons, and labor market flows, such as the pace of hires and quits."
There's a lot of information in these four sets of charts -- much more than we have space here to elaborate on. Depending upon the indicator, the optimal relative position of the different colored dots varies. You will just have to work it out yourself.
First, a bit of a technical note. The National Bureau of Economic Research, which determines the business cycles, pegged December 2007 as a peak, which also means that's the month that the recession began. And they said that June 2009 was a trough, which means that's the month the recession ended and the recovery started.
Since a single month's datum for any measurement can be a little misleading, we present quarterly or other three-month figures of the data. Therefore, on all of these charts, the blue dots (when the recession started) are Q4 2007 data or December 2007, the green dots (when the recession ended and the recovery started) are Q2 2009 or June 2009 data, and the brownish dots (labeled as "current") are for Q2 2014 or June 2014.
Therefore, since the blue dots represent labor market measurements when the economy was at a peak, the space between them and the brownish dots could be said to be the "slack" that needs to be tighten up. When the brownish dots get closer to the blue dots -- and further away from the green dots -- then the labor market is tighter, perhaps too tight since the blue dots represent the indicators as the recession started. The green dots are pretty much the recession at its lowest level although some indicators will continue to decline for a short time in the early stage of a recovery.
For example, in the top chart in the first set of charts, the current unemployment rate (the brownish dot) has nicely moved away from the where it was at the end of the recession (the green dot) and is approaching what was a time of a very tight labor market (the blue dot). There's some, but not too much, slack for this labor market indicator.
Let's look at Quits, which is when people voluntary leave their jobs. This is seen as a good development because it is a manifestation of a strong job market -- someone leaves a job because they are confident they will get or be getting another job, which is likely a better job. Notice how this indicator was much further along when the economy peaked (the blue dot) than it is currently (the brownish dot). But it has improved as seen by the current reading being away from the place it was at the end of the recession (the green dot). Clearly an improvement for this indicator has taken place, but there is still some room for more.
[Technical explanation: the "three-month percent change" and "three-month net change" is the change from three months prior; for these data, it's the change from the last month of the previous quarter.]
When the recession started, the three-month net change in December 2007 for total nonfarm jobs was 297,000. When the trough was reached in June 2009, it was negative 1.5 million. In June 2014, it was 831,000. As the economy peaked in December 2007, job growth slowed down and today is much strong then at that time.
At the bottom of our Economic Indicators webpage, we provide a brief overview of most of these labor market indicators that may assist you in interpreting all the information presented in these three sets of charts. BTW, we are currently transitioning the format and appearance of our economic indicators, starting with this month's jobs and employment data. Check it out.
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 eight 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, Thursday, July 3rd. 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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August 2014 Employment Report
The unemployment rate incrementally declined, which the U.S. Bureau of Labor Statistics characterized as "changed little," to 6.1 percent in August; it was 6.2 percent in July and 7.2 percent a year ago in August 2013. For more detail, see the "Household Survey" section at the bottom of this column.
On the other side of the monthly employment situation, the total number of jobs was up only 142,000 in most, but not all, sectors, which is a bit of a disappointment from the July's increase of 212,000, which was down from June's growth of 267,000. A year earlier, in August 2013, total job growth was up 202,000.
Total private-sector jobs grew by only 134,000 in August and was a fairly hard deceleration from July's growth of 213,000 and more so from June's addition of 260,000. A year earlier in August 2013, the private-sector grew payrolls by 180,000. The weakness in the jobs numbers was seen in both the Goods-producing and Service-providing sectors.
The private Goods-producing sector grew by only 22,000 jobs in August compared to growth of 67,000 in July.
The private Service-providing sector continued to apply the brakes and slowing to only 112,000 more jobs in August after adding 146,000 in July and growing by 226,000 in June; in August 2013 it added 163,000.
The total number of Government jobs was up by 8,000. The federal government added 3,000 jobs; State government was up by 1,000; and Local government increased by 4,000.
Temporary Help Services Roundup
Although Temporary Help Services continued to grow and reach new highs, the rate of growth fluctuated.
In August, Temporary help services was up 13,000 to 2,896,200, which was a 0.5 percent month-over-month increase and year-on-year growth of 8.0 percent.
In July, the job number was up 9,700, or 0.3 percent sequentially and up 8.2 percent year-on-year; in June, temporary help added 15,000 jobs, which was a 0.5 percent sequential growth and an 8.3 percent increase year-on-year. Take note that the year-on-year growth is decelerating.
Temporary help service's market share -- that is its portion of all jobs -- continued to rise up and reached an all-time high of 2.082 percent in August compared to 2.075 percent in July; it was 1.962 percent in August 2013. To see a chart of Temporary help's growth from January 1991 to August 2014 and comparing the trend to total employment, click here.
(if the chart is unclear, click onit to open in a browser window)
TheAugust 6.1 percent unemployment rate was a 0.1 percent decline from July's 6.2 percent; it was 7.2 percent in August 2013.
That 6.1 percent unemployment rate was the result of a labor force that contracted by 64,000 as the number of employed persons grew by only 16,000 as the number of unemployed persons declined by 80,000. The number not in the labor force increased by 268,000.
The employment-to-population ratio was unchanged at 59.0 percent in August and up from 58.6 percent a year earlier. The labor force participation rate incrementally declined to 62.8 percent (was 62.9 percent in July), and it was lower than the 63.2 percent a year earlier. The number of discouraged workers continued to decline with only 775,000 of them compared to 866,000 a year earlier in August 2013.
BTW, we maintain an updated table of many major employment as well as other economic indicators here or here for the mobile version. And, in case you missed it in our opening commentary, we are starting to change the format of our economic indicators, starting with this month's jobs and employment data.
NEXT EMPLOYMENT REPORT --FRIDAY, OCTOBER 3, 2014
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