Popular Economics Weekly
We know that economic growth has slowed in the first quarter—falling from 3.1 percent growth to 1.8 percent in the second estimate of Q1 GDP growth. But even with slower growth, all sectors are still hiring. And we know there are 3.1 million job openings per the Labor Department’s April JOLT Survey, vs. just 2 million in 2009.
So should we worry about the sharp drop in the Bureau of Labor Statistics’ May unemployment report that said just 54,000 nonfarm payroll jobs were created? Although economists are dismissing seasonal factors such as Tsunamis and tornados; motor vehicles lost 3,400 jobs from the Japanese shutdown of parts factories, 13,000 jobs were lost in ‘nondurable’ goods (retail products, mostly) which could also be attributed to weather factors, and governments shed another 28,000 jobs. State and local governments have now shed 446,000 jobs since September 2008 because of reduced tax revenues.
Calculated Risk gives us the reasons that job creation has slowed but is still growing.
• Initial weekly unemployment claims have averaged 425,500 per week in May, about the same as in December 2010 and January 2011. The BLS reported an average of just over 100 thousand payroll jobs added during those two months (although there were some weather issues in January).
• The ISM manufacturing index slowed sharply in May, however the Institute for Supply Management noted: "Manufacturing employment continues to show good momentum for the year, as the Employment Index registered 58.2 percent, which is 4.5 percentage points lower than the 62.7 percent reported in April." This suggests manufacturers were still expanding their payrolls in May (the regional manufacturing surveys also showed payroll expansion).
As if to counteract the weak jobs report and ISM manufacturing index, the May ISM service sector index just reported broad month-to-month acceleration in the non-manufacturing economy. The report's composite headline index rose nearly two points to 54.6 with strength centered where it should be, that is in new orders which rose more than four points to 56.8. Employment, in contrast to this morning's jobs report, accelerated nicely, up more than two points to a 54.0 level that for this report is very strong. In other readings, deliveries lengthened, which is a sign of strength, and backlog orders rose at a healthy pace.
So the jobs picture is still bad for those still looking for jobs, but wages and hours worked are rising. This means more hiring on the horizon. A few examples of regional reports from Calculated Risk: The Chicago PMI reported: "Breadth of EMPLOYMENT expansion softened but remained strong." The employment index decreased to a still strong 60.8 from 63.7 (above 50 is expansion). And the Philly Fed reported: "Firms’ responses continue to indicate overall improvement in the labor market despite weaker activity ..." and the Empire State survey showed "The index for number of employees inched up to 24.7, indicating that employment levels expanded over the month, and the average workweek index rose thirteen points to 23.7, a multi-year high." (above 0 is expansion).
WSJ Marketwatch also saw a silver lining in the job numbers. Job demand for different sorts of workers is not the same, so certain jobs and industries are more heavily weighted in some markets than others. Meanwhile, with all of the cuts to state and local governments, public-sector openings are lagging private-sector openings, as we said.
The Monster jobs online jobs index also weakened. But “In San Francisco, we have seen robust private-sector hiring, with IT certainly being huge,” said Monster Worldwide Spokesperson Matthew Henson, according to Marketwatch. “When you look at markets like Pittsburgh and Seattle, there’s a healthy mixture of blue-collar and white-collar jobs. Kansas City is seeing large demand for creative and marketing.”
The 10 ‘hottest’ job markets, according to Monster, are:
2. San Francisco
10. Kansas City
Harlan Green © 2011