August 2, 2019 – Employers added 164,000 jobs last month as the U.S. unemployment rate stands at 3.7 percent, according to the most recent U.S. Bureau of Labor Statistics report. The increase was below the 165,000 forecast by economists, but close enough. The July gain is the 106th consecutive month of job growth. The number of unemployed currently stands at 6.1 million.
“While we still see strength in the labor market, it has shown signs of weakening,” said Ahu Yildirmaz, VP and co-head of the ADP Research Institute. “A moderation in growth is expected as the labor market tightens further.”
“Job growth is healthy, but steadily slowing,” said Mark Zandi, chief economist of Moody’s Analytics, which produces the report in collaboration with the ADP Research Institute. “Small businesses are suffering the brunt of the slowdown. Hampering job growth are labor shortages, layoffs at bricks-and-mortar retailers, and fallout from weaker global trade.”
Where Job Growth Occurred
- Professional and technical services added 31,000 jobs in July, bringing the 12-month job gain to 300,000. In July, employment increased by 11,000 in computer systems design and related services; this industry accounted for about one-third of employment growth in professional and technical services both over the month and over the year.
- Employment in healthcare rose by 30,000 over the month, reflecting a gain in ambulatory health care services (+29,000). Health care employment has increased by 405,000 over the year, with ambulatory health care services accounting for about two-thirds of the gain.
- Social assistance added 20,000 jobs in July. Employment in this industry has increased by 143,000 over the year.
- In July, financial activities employment rose by 18,000, with most of the gain occurring in insurance carriers and related activities (+11,000).
- Mining employment declined by 5,000 in July, after showing little net change in recent months.
- Manufacturing employment changed little in July (+16,000) and thus far in 2019. Job gains in the industry had averaged 22,000 per month in 2018.
- Employment in other major industries, including construction, wholesale trade, retail trade, transportation and warehousing, information, leisure and hospitality, and government, changed little over the month.
Hiring to Continue
U.S. employers are expecting hiring to pick up as we look to the second half of 2019, with 21 percent of employers planning to add staff, according to the latest “Employment Outlook Survey,” released by ManpowerGroup. Employers in all U.S. regions and industry sectors said they are expecting headcount to grow.
Employers in all 13 national industry sectors said they expect to add to payrolls during the third quarter: professional and business services (+28 percent), leisure and hospitality (+27 percent), transportation & utilities (+25 percent), wholesale & retail trade (+24 percent), construction (+21 percent), government (+20 percent), mining (+19 percent), durable goods manufacturing (+18 percent), financial activities (+17 percent), education & health services (+16 percent), nondurable goods manufacturing (+16 percent), other services (+16 percent) and information (+14 percent).
Employers to Continue on with Hiring Plans
U.S. businesses report strong hiring intentions, according to the latest “Employment Outlook Survey” by ManpowerGroup. Let’s go inside the latest forecast and see which sectors and regions are in growth mode. Search expert Richard Risch then weighs in.
“At a time of record low unemployment and employer optimism at levels we haven’t seen since the mid-2000s, we need to do more to connect people to jobs if we’re going to sustain economic growth,” said Becky Frankiewicz, president of ManpowerGroup North America. “With such strong competition for talent, skilled workers are choosing when, where and how they work. We find jobs for 275,000 workers every year and know flexibility, access to childcare and clear career paths are especially attractive benefits to women and men.”
“To find and retain top talent, the best companies are offering holistic benefits packages with accelerated training programs and opportunities to learn, earn more and move up so employees have the skills for jobs today and tomorrow,” she said.
Search Consultants Weigh In
“Demand within talent attraction and people driven professional services has been and remains strong for our firm within the industries we partner with which are consumer, food/bev, cannabis, hospitality and banking, and we see this reflected across most industries,” said Michael Bitar, partner at Protis Global. “We’ve seen a 42.5% increase year to date through June 30 and the hiring and growth expectations from our clients for the remainder of 2019 also support the premise that there is no slowdown in sight. We are always cautiously optimistic, but it appears that demand for talent will continue to trend up.”
“With a total of 18.5 million jobs across the manufacturing and wholesale trade business sectors, there are over 800K employees with experience in these industries that are currently unemployed, and with an average annual earnings of $87,154 per job, our industry is ripe with opportunity to bridge the skills gap with qualified talent,” added Richard Sharpe, director of talent analytics at Protis Global.
“Any monthly job report is just a snap-shot — interesting and briefly newsworthy, but just one data point,” said Jay Rosenzweig, CEO of Rosenzweig & Company. “If you step back, there are some big question marks out there that should at least give individuals in our industry pause. Corporate capital investment is soft and concerns about China tariffs and a fallout from Brexit could well dampen future hiring and expansion. The fact that the Fed cut rates for the first time in months I think reflects these uncertainties.”
“Looking further out, I think an argument can be made that the employment engine is losing steam,” he added. “And I agree with entrepreneur and Democratic presidential candidate Andrew Yang’s assessment that unless we have a viable strategy to deal with the AI revolution, we could not only already be near or past peak employment, but could well face challenging headwinds for a generation.”
“We met recently with a CHRO of a leading middle market manufacturer that is poised for growth,” said Dave Hansen, principal at OverNorth. “The CHRO mentioned that, given the tight labor market, it’s even more critical the company has the right leaders in place. These leaders drive the company’s positive culture and allow them to retain their valued employees and execute on their plans. We’re seeing many companies prioritizing the retention of their key employees.”
The View from Europe
Unemployment rates in the European Union and eurozone have also dropped to record lows. But economic growth and inflation figures recently released showed that European economies were slowing down just as the US-China trade war accelerates. And President Trump’s tariff statement vis-a-vis China this morning isn’t helping.
The European Union’s statistical office Eurostat earlier this week reported the EU’s lowest unemployment rate since records began in 2000.
The EU unemployment rate dropped to 6.3% in June, making it the “lowest rate recorded” in the bloc.
The eurozone, which comprises the 19 member states of the euro monetary union, dropped to 7.5%. Eurostat described it as “the lowest rate recorded in the euro area” since the 2008 financial crisis.
However, figures also pointed to a sluggish economic growth across the bloc. The EU and Eurozone grew by 0.2% during the second quarter of 2019. Inflation dropped from 1.3% in June to 1.1% in July.
The US-China trade war has sent financial shock waves throughout the global economy, with the International Monetary Fund (IMF) downgrading its outlook earlier this month.
Contributed by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsansky, Managing Editor; Stephen Sawicki, Managing Editor; and Andrew W. Mitchell, Managing Editor – Hunt Scanlon Media