"May Jobs Race Ahead, But Are We Headed for a Hiring Slowdown?"
- Nick Andriacchi
- Jun 12, 2024
- 4 min read
The May Jobs numbers easily beat expectations. Using an analogy, the car looks great on the outside. But when checking under the hood, the talent market may not be running on all cylinders.
· Nonfarm payrolls expanded by 272,000 for the month, up from 165,000 in April and well ahead of the Dow Jones consensus estimate of 190,000.
· The unemployment rate rose to 4%, the first time it has breached that level since January 2022.
· Job gains were concentrated in health care, government, and leisure and hospitality, consistent with recent trends.
· Average hourly earnings were higher than expected as well, rising 0.4% on the month and 4.1% from a year ago.
· The survey of households used to compute the unemployment rate showed that the level of people who reported holding jobs fell by 408,000.
The last bullet point and following paragraphs tend to focus more on smaller businesses data that may not show up in the establishment survey.
A big adjustment for 2023 is due in August when the Quarterly Census of Employment and Wages (QCEW) data is released. This data is drawn from unemployment insurance tax records filed by more than 12 million establishments. The payroll numbers are benchmarked each February to bring them in line with the QCEW figures. The BLS provides an initial estimate of that revision in August.
A chunk of the potential overestimation of payrolls stems from adjustments the agency makes to the monthly employment report to account for the net amount of businesses opening and going under, Wong and Knapp say. Because the BLS only surveys existing establishments, it uses a so-called birth-death model to estimate those flows.
“The labor market saw a turning point sometime in the second half of 2023,” Anna Wong, chief US economist at Bloomberg Economics said. “Business closures surged, while new business formations slowed sharply.”
For a deeper dive….
· A more encompassing measure of unemployment (U6) that includes discouraged workers and those holding part-time jobs for economic reasons stayed flat 7.4%.
· Prime age labor force participation rate (ages 25-54) was up .1% to 83.6%.
· The overall labor force participation fell .2% to 62.5%. This is still .7% below the level of February 2020.
· In May, average hourly earnings for all employees on private nonfarm payrolls increased by 14 cents, or 0.4 percent, to $34.91. Over the past 12 months, average hourly earnings have increased by 4.1 percent. In May, average hourly earnings of private-sector production and nonsupervisory employees increased by 14 cents, or 0.5 percent, to $29.99.
· The average workweek for all employees on private nonfarm payrolls remained at 34.3 hours in May. In manufacturing, the average workweek was unchanged at 40.1 hours, while overtime edged up to 3.0 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls edged up by 0.1 hour to 33.8 hours.
· APD is reported that 152,000 jobs were added in May. 20,000 less than April.
Source: ADP, BLS, CNBC, Fox News
JOB OPENINGS AND LABOR TURNOVER – April 2024
The number of job openings changed little at 8.1 million on the last business day of April, the U.S. Bureau of Labor Statistics reported today. Over the month, both the number of hires and total
separations were little changed at 5.6 million and 5.4 million, respectively. Within separations, quits (3.5 million) and layoffs and discharges (1.5 million) changed little. 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 of job openings changed little at 8.1 million; this measure was down by 1.8 million over the year. The rate was little changed at 4.8 percent in April. Job openings decreased in health care and social assistance (-204,000) and in state and local government education (-59,000) but increased in private educational services (+50,000).
Hires
In April, the number of hires was little changed at 5.6 million. The rate held at 3.6 percent. Hires increased in durable goods manufacturing (+52,000), but decreased in arts, entertainment, and recreation
(-45,000) and in federal government (-8,000). (See table 2.)
Separations
Total separations include 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 include separations due to retirement, death, disability, and transfers to other locations of the same firm.
The number of total separations in April changed little at 5.4 million, and the rate was unchanged at 3.4 percent. Over the month, the number of total separations increased in durable goods manufacturing (+49,000).
In April, the number of quits was little changed at 3.5 million, and the rate was 2.2 percent for the sixth month in a row. The number of quits decreased in professional and business services (-131,000), but
increased in other services (+67,000), durable goods manufacturing (+39,000), and state and local government education (+32,000).
In April, the number of layoffs and discharges changed little at 1.5 million, and the rate held at 1.0 percent. The number of layoffs and discharges decreased in arts, entertainment, and recreation (-37,000).
The number of other separations was little changed in April at 349,000.
Establishment Size Class
In April, for establishments with 1 to 9 employees, the job openings rate, hires rate, and total separations rate changed little. For establishments with 5,000 or more employees, the hires rate increased while the job openings rate and total separations rate changed little.
March 2024 Revisions
The number of job openings for March was revised down by 133,000 to 8.4 million, the number of hires was revised up by 117,000 to 5.6 million, and the number of total separations was revised up by 130,000 to 5.3 million. Within separations, the number of quits was revised up by 80,000 to 3.4 million and the number of layoffs and discharges was revised up by 75,000 to 1.6 million. (Monthly revisions result from additional reports received from businesses and government agencies since the last published estimates and from the recalculation of seasonal factors.)
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The Job Openings and Labor Turnover Survey estimates for May 2024 are scheduled to be released on Tuesday, July 2, 2024, at 10:00 a.m. (ET).
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