Strong June rebound signals job growth is solid again — but substantial raises remain elusive

With a strong rebound in job growth last month, the labor market is back on solid ground. But workers are still struggling to get the substantial wage gains they’ve been craving since the end of the recession, economists said.

Here are the highlights:

  • The economy added 222,000 net new jobs, the Labor Department said — the best performance since February and well above analyst expectations.
  • The unemployment rate ticked up to 4.4% from May’s 16-year low, but because more people joined the labor force.
  • May’s job growth was revised up to 152,000 and April also was revised up, as part of a gain of 47,000 more total jobs for those two months than initially estimated.
  • Wages continued their steady but slow recent growth, increasing 4 cents to $26.25.

“Hiring is back to where it has been throughout much of the 8-year-old economic expansion,” said Mark Hamrick, senior economic analyst at financial information website Bankrate.com.

“Growth is modest, not spectacular, which is to be expected for a mature expansion.”

Job growth returns to 2016 pace

With June’s strong growth and the statistical revisions, monthly job gains have averaged 180,000 this year, close to last year’s level of 187,000.

On Monday, President Trump criticized the media for ignoring the “great jobs numbers” since he took office. The White House offered a muted response Friday, with Press Secretary Sean Spicer touting the job gains on Twitter as “great news” for U.S. workers.

Economists said the pace of job growth this year has not been great, but has been solid. And the bounce back in June allays any fears of a significant slowdown.

“This was a good jobs report. It suggests there’s still a fair amount of vitality in the U.S. labor market,” said Nariman Behravesh, chief economist at IHS Markit, a business research and analysis firm.

But the report probably overstated the strength of the market somewhat because it was boosted by a gain of 35,000 net new jobs in state and local government after the sector shed 8,000 positions in May, he said.

The June gains likely represent a temporary jump as school districts made new hires for the fall, Behravesh said. He expected job growth in coming months to be in the range of 150,000 to 180,000.

Retail gains jobs for first time since January

Customers shop at an Aldi grocery store in Chicago on June 12.
Customers shop at an Aldi grocery store in Chicago on June 12. (Scott Olson / Getty Images)

June’s job growth was boosted by large increases in hiring in the healthcare and social-assistance sector, as well as by local governments.

But the most notable move was by retailers. The sector added 8,100 net new jobs in June after shedding 7,200 the previous month.

From February through May, retail payrolls declined by 79,400 jobs as the sector struggled with the growing shift to online shopping.

“The gain in June shows that the industry is still very much meeting the demands of consumers and households,” said Jack Kleinhenz, chief economist for the National Retail Federation.

He cautioned that “one month does not make a trend,” a point echoed by other economists.

“We won’t see sustained employment growth in the retail sector,” said Cathy Barrera, chief economic advisor at ZipRecruiter, the Santa Monica job-hunting site.

“Between the competition with online options for consumers and for new technologies that are replacing workers in stores — self checkout is one example of that — I don’t think those jobs are going to be there in the long run,” she said.

A higher jobless rate is actually good

(@latimesgraphics)

The unemployment rate rose 0.1 percentage point last month after hitting its lowest level since 2001 in May. But the increase, to 4.4%, was for a good reason — 361,000 people joined the labor force a month after it contracted.

That nudged up the percentage of working-age Americans either working or actively looking for a job to 62.8%. That labor force participation rate still is near a four-decade low, and economists said the increasing retirement of baby boomers makes it difficult to boost the level significantly.

The participation rates for men and women ages 25 to 54 have almost gotten back to their pre-recession levels, Barrera said. But for Americans ages 16 to 24, the recovery has been slower.

“It makes sense that this is the last group to recover,” she said. “There just weren’t a lot of jobs available for young people high school-age or college-age during the recession.”

Some of them have opted to stay in school longer to boost their job qualifications, Barrera said. Getting those Americans back in the workforce will help tighten the labor market and lead to increased wages.

Wage growth is still struggling

Average hourly earnings increased 4 cents last month to $26.25, a slight improvement over May’s gains.

For the 12 months ended June 30, wages have increased 2.5%. That’s a slight increase over the 12-month period ended May 31 and above the low rate of inflation. But it’s still short of the stronger growth economists have been hoping for as the labor market tightens.

“If wages accelerate, that will encourage more people who might have given up looking for work to start looking again,” said Jed Kolko, chief economist with employment website Indeed.com. “That’s why wages are an important and the most troubling piece of the puzzle right now.”

With unemployment low, employers should be forced to increase wages to lure new workers and keep existing ones.

But some of the biggest job gains in June were in lower-wage sectors, like healthcare and temporary workers, which kept wage growth down, Kolko said

“It’s unclear how much the slower wage growth is due to long-term factors, like productivity slowdown and demographic shifts, and how much of it could be reversed by a tighter labor market and employers bidding up wages,” he said.

Federal Reserve monetary policymakers have been expecting faster wage growth as the unemployment rate falls.

Still, the job-creation figures for June should provide relief to central bank officials, who have been increasing a key short-term interest rate in large part because of the strength of the labor market.

In June, the Fed nudged the rate up for the third time in six months. Even though the pace of job growth has moderated this year, Fed Chairwoman Janet L. Yellen said the labor market “continues to strengthen.”

If job growth remains solid, the Fed is expected to raise the rate again before the end of the year.

L.A. Times

July 7, 2017

 

ACE Report: Region’s jobs drop in August, but increase year-over-year

The monthly tally of Northeast Ohio private payrolls in August continued on its roller coaster of up one month and down the next, with the Ahola Crain’s Employment (ACE) Report showing a decrease of 3,626 jobs from July, a 0.31% decline.

Longer term, though, employment in the seven-county Akron-Cleveland metro area was 8,340 jobs higher in August than a year ago, a 0.71% increase.

“The economy is in its eighth year of economic recovery and still remains in its expansion phase of a payroll cycle,” reported Jack Kleinhenz, the Cleveland Heights economist who created the ACE model. “It has been on a slow path of economic growth, but the labor market continues to maintain momentum.”

Statewide, nonagricultural wage and salary employment grew by 77,000 jobs year-over-year, a 1.35% increase, based on a survey by the U.S. Bureau of Labor Statistics released last Tuesday, Sept. 20 by the Ohio Department of Jobs and Family Services.

Employment in all 88 Ohio counties decreased by 2,000 positions, from 5,505,400 in July to 5,503,400 in August.

Analyzing the state data, the nonprofit Policy Matters Ohio think tank, which is supported by foundations, community organizations and unions, reported that Ohio’s 12-month job growth rate of 1.35% continues to trail the national average of 1.7%, but it represents an improvement over the pace of job creation since the official start of the last national recession in 2007.

“Ohio needs many more months of five-figure employment growth to close the job gap, so (August’s) losses are disappointing,” said researcher Hannah Halbert in a press release. “However, the August loss is slight, and didn’t come close to wiping out recent gains. That’s an improvement from the earlier trend.”

Although Northeast Ohio and the state posted job losses, Kleinhenz noted that the country posted a less-than-expected gain of 151,000 jobs. CNBC reported that Wall Street economists were expecting the nonfarm payrolls report to show a gain of 180,000 in August.

“This figure still remains above the required gain to keep the unemployment rate moving down on a slow, yet steady, pace,” Kleinhenz said. “It is important to note that as the economy gets closer to its full employment — and we are getting close — finding workers increases in difficulty.”

Kleinhenz cited Bureau of Labor Statistics data that show job openings “rose sharply in July, and the rate of openings was a record high. Meanwhile, the increase in hiring was not as great. Openings have grown faster than hires for nearly every month over the last year and a half.”

Hirings differ from job gains since job gains are net of hirings, firings and employment lost from deaths.

“All in all the data suggest that firms are having a challenging time filling positions but also indicating that workers are moving to jobs that better suit them and their efficiencies,” Kleinhenz reported.

Seaonally adjusted

Ace-Report-Aug
Month Non-Farm Small (1-49) Mid-Sized (50+) Goods-producing Service Producing
Mar-16 1,175,919   478,541   697,378  215,829 960,090
Apr (est) 1,171,007   476,478   694,529  215,846 955,161
May (est) 1,176,132   478,537   697,595  217,167 958,965
Jun (est) 1,174,496   477,833   696,663  217,419 957,077
Jul (est) 1,178,355   479,348   699,007  218,912 959,442
Aug (est) 1,174,729   478,016   696,713  216,188 958,541
Recent Month’s Estimated Change Non-Farm Small (1-49) Mid-Sized (50+) Goods-producing Service Producing
July ’16 to Aug ’16 (3,626)  (1,331.90)  (2,294) (2,724) (902)
Diff from Aug 2015 8,340  3,484  4,856 244 8,096
Trend Non-Farm Small (1-49) Mid-Sized (50+) Goods-producing Service Producing
3-month 1,175,860 478,399 697,461  217,507  958,353
6-month 1,175,106 478,125 696,981  216,894  958,213

September 23, 2016

Photo by COLE GOLDBERG