Jobs Report Points to a Second Interest Rate Cut

At a time when fears of a global recession are growing, today’s jobs report offers hope. Although weaker-than-expected, today’s figures all but assure a second interest rate cut. Let’s check out the latest numbers.

September 6, 2019 – Employers added 130,000 jobs last month, keeping 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 160,000 forecast by economists but close enough to signal a relatively stable and healthy jobs market. The August gain is the 107th consecutive month of job growth. The number of unemployed currently stands at 6.0 million. The key question now: can the U.S. economy continue to expand in the face of growing headwinds – from weak manufacturing to a looming recession in Germany to the fallout from Brexit later this year.

“Although job growth slowed down in August, employment in the gig economy is continuing to grow at an exponential rate,” said Rebecca Henderson, CEO Randstad global businesses. “With projections that gig workers will amount for almost half of the workforce by 2027, employers need to implement recruitment strategies that resonate not only with permanent talent, but with contingent ones as well.”

“One of our recent studies found that 72 percent of permanent talent and 71 percent of contingent talent look to work for companies that put an emphasis on creating diverse and inclusive workplaces,” she said. “Companies across the nation already have diversity and inclusivity programs in place, but what this study is highlighting is the need for human capital professionals to build out a universal framework that meets the needs of a total talent workforce.”

Where Job Growth Occurred

  • In August, employment in federal government increased by 28,000. The gain was mostly due to the hiring of 25,000 temporary workers to prepare for the 2020 Census.
  • Healthcare added 24,000 jobs over the month and 392,000 over the past 12 months. In August, employment continued to trend up in ambulatory healthcare services (+12,000) and in hospitals (+9,000). In August, financial activities employment rose by 15,000, with nearly half of the gain occurring in insurance carriers and related activities (+7,000).
  • In August, financial activities employment rose by 15,000, with nearly half of the gain occurring in insurance carriers and related activities (+7,000). Financial activities has added 111,000 jobs over the year.
  • Employment in professional and business services continued to trend up in August (+37,000). Within the industry, employment increased by 10,000 both in computer systems design and related services and in management of companies and enterprises. Monthly job gains in professional and business services have averaged 34,000 thus far in 2019, below the average monthly gain of 47,000 in 2018.
  • Social assistance employment continued on an upward trend in August (+13,000). Within the industry, individual and family services added 17,000 jobs. Social assistance has added 100,000 jobs in the last 6 months.
  • Mining employment declined by 6,000 in August, with nearly all of the loss in support activities for mining (-5,000).
  • Retail trade employment changed little in August (-11,000). General merchandise stores lost 15,000 jobs over the month and 80,000 jobs over the year. Building material and garden supply stores added 9,000 jobs over the month.
  • Employment showed little change over the month in construction, manufacturing, transportation and warehousing, and leisure and hospitality. Job growth in these industries has moderated thus far in 2019 compared with 2018.

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.”

Related: Nearly Half of Employers Plan to Ramp Up Hiring

“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. 

Looking further ahead, economists foresee ongoing economic expansion for at least the next 12 months and companies expect to continue hiring, according to a business conditions survey released by the National Association for Business Economics (NABE). All survey respondents said that they expect the U.S. economy, as measured by the change in inflation-adjusted gross domestic product (real GDP), to increase over the next four quarters.

The Net Rising Index (NRI) for wages and salaries remains strong. Last month’s reading of 57 is just a notch below January’s all-time high NRI of 58. Wage increases are likely to become less prevalent among respondents’ firms, but are expected to remain solid; the forward-looking NRI for expected wage costs decreased from 74 to a still strong 59.

“The results of the survey indicates that all respondents still expect the economic expansion to continue within the next 12 months,” said NABE business conditions survey chair Sam Kyei, chief economist of SAK Economics LLC. “However, barely half of the panelists foresees growth in real gross domestic product to expand by more than two percent compared to two-thirds of respondents who expressed that view in the January 2019 survey.”

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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