June 1, 2018 – Employers added 223,000 jobs last month as the U.S. unemployment rate dropped to an 18-year low of 3.8 percent, according to the most recent U.S. Bureau of Labor Statistics report. The May gain is the 92nd consecutive month of job growth. The number of unemployed people dipped to 6.1 million. Analysts had expected the unemployment rate to drop to 3.9 percent and 188,000 jobs to be created.
“We’ve continued to add jobs routinely every month for so long, and the unemployment rate we have reached is amazing,” said Catherine Barrera, chief economist of the online job site ZipRecruiter. “This is the economy doing well.”
The overall recent surge of job gains may reflect, in part, confidence among some businesses that the Trump administration’s tax cuts will accelerate growth – even though a growing roster of economic experts disagree with that assumption. Consumers are also benefiting from higher after-tax income, which grew last month at the fastest pace in a year, aided by the tax cuts. Some envision the unemployment rate dropping as low as 3.5 percent by the end of 2018.
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“I hear my clients saying the tax bill gave them more confidence in the pro-business economy,” said Tom Gimbel, CEO of search firm LaSalle Network. “There’s confidence coming from D.C. that they’re not going to get in the way.”
Where Job Growth Occurred
- In May, retail trade added 31,000 jobs, with gains occurring in general merchandise stores (+13,000) and in building material and garden supply stores (+6,000). Over the year, retail trade has added 125,000 jobs.
- Employment in healthcare rose by 29,000 in May, about in line with the average monthly gain over the prior 12 months. Ambulatory health care services added 18,000 jobs over the month, and employment in hospitals continued to trend up (+6,000).
- Employment in construction continued on an upward trend in May (+25,000) and has risen by 286,000 over the past 12 months. Within the industry, nonresidential specialty trade contractors added 15,000 jobs over the month.
- Employment in professional and technical services continued to trend up in May (+23,000) and has risen by 206,000 over the year.
- Transportation and warehousing added 19,000 jobs over the month and 156,000 over the year. In May, job gains occurred in warehousing and storage (+7,000) and in couriers and messengers (+5,000).
- Manufacturing employment continued to expand over the month (+18,000). Durable goods accounted for most of the change, including an increase of 6,000 jobs in machinery. Manufacturing employment has risen by 259,000 over the year, with about three-fourths of the growth in durable goods industries.
- Mining added 6,000 jobs in May. Since a recent low point in October 2016, employment in mining has grown by 91,000, with support activities for mining accounting for nearly all of the increase.
- In May, employment changed little in other major industries, including wholesale trade, information, financial activities, leisure and hospitality, and government.
CEO Confidence in the Economy at All-Time High
A record-breaking number of CEOs are optimistic about the short term economic environment, according to PwC’s 21st annual survey of CEO sentiment. Fifty-seven percent of business leaders said they believe global economic growth will improve in the next 12 months.
Recruiters Weigh In
“We are seeing a talent shortage of qualified supply chain professionals at all management levels, said Matt Albanese, CEO of the Everest Group, an executive search firm that specializes in supply chain, distribution, logistics and transportation.
“This is being driven by the digital age which has substantially impacted consumer buying habits – including an increase in reverse logistics. The industry is lacking technically qualified individuals with strong analytics and systems knowledge to keep up with the digital transformation the supply chain industry is facing as a whole,” he said. “This is similar to the need for qualified software engineers we saw 15 years ago as a result of the growing needs within the technology space.”
“We have enjoyed almost zero unemployment here in the federal market,” said Evan Scott, president of the Washington, D.C.-headquartered recruiter ESGI, which specializes in the federal contracting and technology sectors. “One reason is that the customer (federal government) has money that has to be spent every year. The other is that selling into the federal government is very specialized.”
“Executives who sell in the commercial sector have a very difficult time making the transition into federal contracting. The sales cycles are long and it is harder to control outcomes,” Mr. Scott said. “Unlike in the commercial sector you can’t just go into a customer to close the deal. The reason we are in this sector is basic supply and demand. As more companies and investors enter into federal contracting that does not increase the pool of talent. Thus, the demand is outpacing the talent, which is good for an executive search firm that specializes in this sector.”
Roy Munk, founder and president of Rocky River, OH-based search firm Global Healthcare Services Recruiting, said: “Despite some frightening headlines lately, increased market volatility, and weak returns on stocks in the first quarter of 2018, if you look closely, very strong economic fundamentals remain in place which points toward solid growth in hiring, the GDP, and the economy in general for the remainder of 2018.”
Healthcare hiring, in particular, he said, “remains candidate-driven as there are shortages across the sector including roles in nursing, physical therapy, and laboratory amongst several others.” Mr. Munk has completed more than 375 search assignments since 1997. “GHS Recruiting has seen a continued and increased aggressiveness in hiring from hospitals and healthcare systems across the country evidenced by large signing bonuses, healthy upswing in salaries, and multiple offers for candidates. We remain upbeat on hiring on 2018, particularly in healthcare.”
Still a Lack of Available Talent
A company’s workforce is clearly its most valuable asset. The largest expense on any employer’s balance sheet is headcount, and investing in employees and their skills are critical to an organization’s success. Smart employers are acting now to ensure they have the most highly skilled and productive workforce to ensure their organization is prepared for whatever business challenges are coming.
According to the “Definitive Guide” report by Adecco, nearly half (48 percent) of best-in-class companies are already increasing training in critical skill areas to help combat the skills gap. Employees likely want to fill any holes in their skill-set, but cost can be prohibitive. These programs can be expensive. But for companies, the initial investment in alternative training programs may pay lasting dividends, especially where global competition is concerned, said Adecco.
Governments, businesses and employees can learn a lot from what the U.S. economy and workforce endured during the great recession. What is certain is that American workers will show resilience in the face of a daunting labor market, said Adecco. By applying that same resilience, innovation and reinvention to the current skills gap challenge, the report concluded, the American workforce will undoubtedly evolve to meet the needs of the new global economy.
A significant part of the challenge will be balancing the development of soft and hard skills; both will be required to effectively navigate and tackle new industries, technologies and global competitors. And while these are the same dynamics responsible for widening the skills gap, the report said, they will also help connect the American workforce and economy to a greater success and prosperity.
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