Unemployment Rate Drops Slightly as Fears of a Recession Continue to Loom
July 10, 2023 – Employment rose by 209,000 in June as the U.S. unemployment rate dropped slightly to 3.6 percent, according to the most recent U.S. Bureau of Labor Statistics report. The number of unemployed persons was 6 million in June. Employment continued to trend up in government, health care, social assistance, and construction.
Among the major worker groups, the unemployment rate for whites declined to 3.1 percent in June. The jobless rates for adult men (3.4 percent), adult women (3.1 percent), teenagers (11.0 percent), blacks (6.0 percent), Asians (3.2 percent), and Hispanics (4.3 percent) showed little change over the month.
The number of long-term unemployed (those jobless for 27 weeks or more), at 1.1 million, changed little in June and accounted for 18.5 percent of the total unemployed. In June, the labor force participation rate was 62.6 percent for the fourth consecutive month, and the employment-population ratio, at 60.3 percent, was unchanged over the month. The number of persons employed part time for economic reasons increased by 452,000 to 4.2 million in June, partially reflecting an increase in the number of persons whose hours were cut due to slack work or business conditions.
“Today’s employment report offered additional evidence that the labor market is slowly coming into better balance as job growth slows and labor supply steadily expands,” Wells Fargo senior economists Sarah House and Michael Pugliese wrote in a note on Friday. “That said, job growth of +200K is still quite strong even if it is directionally slower than the scorching pace seen over the past year.”
Where Job Growth Occurred
• Employment in government increased by 60,000 in June. Employment continued to trend up in state government (+27,000) and local government (+32,000). Overall, government added an average of 63,000 jobs per month up to that point in 2023, more than twice the average of 23,000 per month in 2022. However, government employment was below its pre-pandemic February 2020 level by 161,000, or 0.7 percent.
• Healthcare added 41,000 jobs in June. Job growth occurred in hospitals (+15,000), nursing and residential care facilities (+12,000), and home healthcare services (+9,000). Offices of dentists lost 7,000 jobs. Healthcare added an average of 42,000 jobs per month this year, similar to the average gain of 46,000 per month in 2022.
• Social assistance added 24,000 jobs in June, mostly in individual and family services (+18,000). Job growth in social assistance averaged 22,000 per month in 2023, in line with the average of 19,000 per month in 2022.
• Employment in construction continued to trend up in June (+23,000). Employment in the industry increased by an average of 15,000 per month this year, compared with an average of 22,000 per month in 2022. In June, employment in residential specialty trade contractors continued to trend up (+10,000).
• Employment in professional and business services changed little in June (+21,000). Monthly job growth in the industry has averaged 40,000 in 2023, down from 62,000 per month in 2022. Employment in professional, scientific, and technical services continued to trend up over the month (+23,000).
• In June, employment in leisure and hospitality was little changed (+21,000). This marked the third consecutive month of little employment change for this industry. Employment in the industry remains below its February 2020 level by 369,000, or 2.2 percent.
Related: CEOs Anticipate a Possible Recession
• Retail trade employment changed little in June (-11,000). Employment continued to decline in building material and garden equipment and supplies dealers (-10,000) and in furniture, home furnishings, electronics, and appliance retailers (-5,000). Motor vehicle and parts dealers added 6,000 jobs. Overall, employment in retail trade showed little net change over the year.
• Employment in transportation and warehousing changed little in June (-7,000) and has shown no clear trend in recent months. Over the month, employment edged down in couriers and messengers (-7,000) and in warehousing and storage (-7,000), while air transportation added 3,000 jobs.
• Employment showed little or no change over the month in other major industries, including mining, quarrying, and oil and gas extraction; manufacturing; wholesale trade; information; financial activities; and other services.
Fear of a Recession Impacting Talent Strategy
As budgets tighten and leaders prepare for a possible recession, recruiters say that investing in the employee experience is still a high priority. Most economists agree that the economy is in an unusual state, leaving them unsure if and when a recession might occur and what it will look like. A new report by Slayton Search Partners says that for businesses that are trying to prepare, now appears to be the time to tighten spending and establish a strong foundation to make it through. “But what about hiring and investing in talent amid economic uncertainty?” asked John Doyle, the report’s author. “The talent market remains bullish despite the threat of a recession, so how should leaders navigate accordingly?”
The Prospect of a Recession Remains Murky
In a new report, The Conference Board says persistent labor shortages, a possible recession, and then rebound in 2024 could be in store for the U.S. economy. Debbie Gollin of The Bachrach Group’s Jackson Lucas, Gary Erickson of Executive Search Partners, John Arbolino of Boothroyd & Co., and Adam Zoia of Glocap join Hunt Scanlon Media to share their thoughts on the economy and what lies ahead.
The news appears to shift on a weekly basis. JPMorgan Chase CEO Jamie Dimon, confirmed there is indeed “recessionary” activity in the current landscape, stemming from some of the headlining bank failures and layoffs. “However, it’s not indicative of a recession such as the U.S. experienced in 2008,” said Mr. Doyle. “The fact is, the monthly job reports of the first quarter were highly positive, and the unemployment rate remains at a 50-year low. Although economists expect unemployment to rise as we edge closer to a recession, the projections are still lower than other historic recessions.”
“Even if a recession doesn’t happen, there is still a challenging landscape that employers must grapple with: namely, high demand for talent, a short supply of skills, inflation-led wage increases, elevated quit rates, and shifting employee expectations,” Mr. Doyle said. In Slayton’s recent executive survey, the firm discovered that 72 percent of senior leaders were considering a job change in 2023, and in many sectors, C-suite turnover is ballooning. Furthermore, in fields like technology, the firm found that talent is expensive and scarce, despite the tech sector layoffs that took over headlines in late 2022 and early 2023. In fact, layoffs at companies besides these high-profile organizations are still relatively rare, according to the report.
“And, interestingly, even if a recession does occur, these challenges will likely remain, especially where the competition for top talent is critically high,” Mr. Doyle said. “Demographic shifts in the U.S. are largely to blame. In particular, the pandemic kickstarted many retirements, and baby boomers continue to age out of the workforce—especially those in executive positions who are increasingly experiencing COVID fatigue. At the same time, data shows that college enrollment rates are on the decline, purportedly because of ballooning tuition costs as well as the more pragmatic outlook of Gen Z compared to their predecessors. The result is decreased access to the skills companies need to lead into the future.”
“Emerging strong from any recessionary storms that may come will depend upon prioritizing the employee experience from top-level leadership all the way down to the front lines,” Mr. Doyle said. “Hiring the right professionals with the right skills, focusing on career and leadership development, and designing a flexible working model are three key strategies for building a resilient workforce. At the end of the day, storm clouds are gathering. Whether or not they will wreak havoc on businesses is still unclear. Leaders who prepare by readjusting their budgets and focusing on the employee experience will be the ones to come out stronger on the other side.”
Related: 3 Reasons For Job Seekers to Work with a Recruiter
Contributed by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsansky, Managing Editor; and Stephen Sawicki, Managing Editor – Hunt Scanlon Media
