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  • Writer's pictureNick Andriacchi

Job Market Still Strong But Showing Some Signs of Cooling

As summertime temperatures heat-up, I am seeing some evidence that the employment market be set to cool – albeit just a little. Don’t get me wrong, demand for labor is still very strong. But there are some signs that a cool down is imminent.


While the top-line May employment number came in better than expected, wages increases were a bit below expectations (+.3%, 5.2% annually) and way below the inflation rate (+8.5%). APD reported a very week jobs number. A recent Fed report said that eight of the central bank’s 12 districts reported slowing growth while four specifically cited recession fears. Lastly, job growth was revised down the last two months and the number of open jobs decreased in April.


Recruiting, while still difficult is getting a little easier. Labor participation was up this month.




Analysis of the May Employment Report


· The economy added 390,000 jobs in May, more than expected, and wages grew by a solid 0.3%, or 5.5% year over year.


· Temporary help showed a nice gain of 19,300 in May.


· A more encompassing measure of unemployment (U6) that includes discouraged workers and those holding part-time jobs for economic reasons at 7.1%.


· Prime age labor force participation rate (ages 25-54) rose slightly this month at 82.6%. This number is up 1% since September and is now down by only .4% since February 2020, the last month before the pandemic started.


· The overall labor force participation is 62.3% up .1%. The labor market is still down about 500,000 compared to February of 2020. Participation among the 20-25 age group recovered somewhat from last month’s steep drop.


· Average hourly earnings for all employees on private nonfarm payrolls rose

by 10 cents, or 0.3 percent, to $31.95 in May. Over the past 12 months, average hourly earnings have increased by 5.2 percent. In May, average hourly earnings of private-sector production and nonsupervisory employees rose by 15 cents, or 0.6 percent, to $27.33.


· In May, the average workweek for all employees on private nonfarm payrolls was 34.6 hours for the third month in a row. In manufacturing, the average workweek for all employees was little changed at 40.4 hours, and overtime fell by 0.1 hour to 3.2 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls remained unchanged at 34.1 hours.


· APD reported that 128,000 jobs were added in May


Source: ADP, BLS, CNBC, ABC News




JOB OPENINGS AND LABOR TURNOVER – APRIL 2022


The number of job openings decreased to 11.4 million on the last business day of April, the U.S. Bureau of Labor Statistics reported today. Hires and total separations were little changed at 6.6 million and 6.0 million, respectively. Within separations, quits were little changed at 4.4 million, while layoffs and discharges edged down to a series low of 1.2 million. This release includes estimates of the number and rate of job openings, hires, and separations for the total nonfarm sector, by industry, and by establishment size class.


Job Openings


On the last business day of April, the number and rate of job openings decreased to 11.4 million (-455,000) and 7.0 percent, respectively. The largest decreases in job openings were in health care and social assistance (-266,000), retail trade (-162,000), and accommodation and food services (-113,000).


The largest increases were in transportation, warehousing, and utilities (+97,000); nondurable goods manufacturing (+67,000); and durable goods manufacturing (+53,000).


Hires


In April, the number of hires was little changed at 6.6 million. The hires rate was unchanged at 4.4 percent. Hires increased in real estate and rental and leasing (+21,000).


Separations


Total separations includes quits, layoffs and discharges, and other separations. Quits are generally voluntary separations initiated by the employee. Therefore, the quits rate can serve as a measure of workers’ willingness or ability to leave jobs. Layoffs and discharges are involuntary separations initiated by the employer. Other separations includes separations due to retirement, death, disability, and transfers to other locations of the same firm.


In April, the number of total separations was little changed at 6.0 million. The rate was little changed at 4.0 percent. Total separations increased in real estate and rental and leasing (+37,000).


In April, the number of quits was little changed at 4.4 million. The rate was unchanged at 2.9 percent. Quits increased in real estate and rental and leasing (+37,000) but decreased in state and local government education (-19,000).


In April, the number of layoffs and discharges edged down to a series low of 1.2 million (-170,000). The rate was little changed at 0.8 percent. Layoffs and discharges decreased in professional and business services (-133,000).


The number of other separations was little changed in April at 363,000. Other separations decreased in educational services (-6,000) but increased in real estate and rental and leasing (+5,000).


Net Change in Employment


Large numbers of hires and separations occur every month throughout the business cycle. Net employment change results from the relationship between hires and separations. When the number of hires exceeds the number of separations, employment rises, even if the hires level is steady or declining. Conversely, when the number of hires is less than the number of separations, employment declines, even if the hires level is steady or rising.


Over the 12 months ending in April, hires totaled 78.0 million and separations totaled 71.6 million, yielding a net employment gain of 6.4 million. These totals include workers who may have been hired and separated more than once during the year.


For a more in-depth description of the JOLTS establishment size class estimates, please visit www.bls.gov/jlt/sizeclassmethodology.htm.

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