Job Growth Rebounds in June; Unemployment Rate Sits at 3.7 Percent

The economy is still creating jobs at a reasonable pace. In fact, companies seem to be hiring with abandon as we enter an unprecedented 11th year of expansion. CEO Rebecca Henderson of Randstad Sourceright and Jacob Navon of Westwood Partners weigh in.

July 8, 2019 – Employers added 224,000 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, the largest since January, topped the 162,000 forecast by economists. The June gain is the 105th consecutive month of job growth. The number of unemployed currently stands at 6.0 million.

“The jobs growth number this month is comforting after a few months of uncertainty,” said Martha Gimbel, director of economic research for the Indeed Hiring Lab. “While job growth may be slowing down from its astonishing rate last year, it’s reassuring that the economy is still creating jobs at a reasonable pace.”

“With May’s disappointing report behind us, those who have been watching for indications of a near-term economic slowdown should take note that neither job nor wage growth have slowed to a point of concern yet,” said Bob Baur, chief global economist at Principal Global Investors.

“It is remarkable that companies continue to hire with abandon this late in the economic cycle as June marks the month where a full 10 years have occurred since the end of the Great Recession,” Chris Rupkey, chief financial economist at MUFG Bank, told the Washington Post. “The economic outlook must be bright for the second half of 2019, otherwise companies would never risk hiring additional help to produce their goods and sell their services.”

Where Job Growth Occurred

  • Professional and business services added 51,000 jobs in June, following little employment change in May (+24,000). Employment growth in the industry has averaged 35,000 per month in the first half of 2019, compared with an average monthly gain of 47,000 in 2018.
  • Employment in healthcare increased by 35,000 over the month and by 403,000 over the past 12 months. In June, job growth occurred in ambulatory healthcare services (+19,000) and hospitals (+11,000).
  • Transportation and warehousing added 24,000 jobs over the month and 158,000 over the past 12 months. In June, job gains occurred among couriers and messengers (+7,000) and in air transportation (+3,000).
  • Construction employment continued to trend up in June (+21,000), in line with its average monthly gain over the prior 12 months.
  • Manufacturing employment edged up in June (+17,000), following four months of little change. So far this year, job growth in the industry has averaged 8,000 per month, compared with an average of 22,000 per month in 2018. In June, employment rose in computer and electronic products (+7,000) and in plastics and rubber products (+4,000).

Employers to Continue on with Hiring Plans
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  • Employment in other major industries, including mining, wholesale trade, retail trade, information, financial activities, leisure and hospitality, and government, showed little change over the month.

Experts Weigh In

“Despite the strongest labor market in decades, unemployment inching slightly upwards suggests consumer confidence could be changing, so now is the time for businesses to more seriously explore leveraging more flexible workforce options,” said Rebecca Henderson, CEO of Randstad Sourceright.

“Investing more in temporary or gig workers can help businesses prepare for greater economic changes through the rest of the year,” she said. “This is also the time to be focused on reskilling full-time workers to handle a wider range of tasks to help fill roles from within.”

“Friday’s labor market releases are consistent with the picture of a healthy U.S. economy that seems resilient to all the increased pressures and uncertainties associated with trade wars with China and others, as well as geopolitical developments in the Middle East,” said Jacob Navon, partner at Westwood Partners. “While the official unemployment rate ticked up to 3.7 percent, this represents a historically low level at, or very close to, what is considered full employment.”

“It remains an open question whether these figures portend a rosy outlook for the balance of 2019 and beyond,” Mr. Navon said. “Labor market statistics are, at best, coincident indicators reflecting what has gone on in the most previous month. Other recent economic releases, which tend to be more predictive of future conditions, have painted a picture of a slowing economy.”

Various surveys of industrial activity, in particular, have declined from more robust previous readings, he said. “During the quarter just ended in June, according to the economic research firm Macroeconomic Advisers, while personal consumption will have risen at 3.7 percent, business investment on structures and equipment will have fallen at around 4.5 percent each,” said Mr. Navon.

“Consumers appear to be reacting to the current healthy employment picture, while businesses seem to be spooked by the aforementioned uncertainties in the global geostrategic outlook,” Mr. Navon said. “While many economists and market strategists believe that the Trump Administration will ultimately engineer seeming solutions to their trade conflicts, yet others believe that what has already transpired has cast a sufficient pall on commercial investment decisions that an economic slowdown, or outright recession, are inevitable.”

Economist Robert Schiller has declared that the next recession has already started. “Clearly if you are in the former camp, you are likely to believe that the jobs picture will remain robust,” said Mr. Navon. “On the other hand if you subscribe to the latter point of view, you are expecting the job figures to begin to deteriorate in the months to come.”

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

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