April 6, 2018 – Employers added 103,000 jobs last month as the U.S. unemployment rate remained at an 18-year low of 4.1 percent, according to the most recent U.S. Bureau of Labor Statistics report. The March gain is the 90th consecutive month of job growth. The number of unemployed people dipped to 6.6 million. Analysts had expected the unemployment rate to drop to 4.0 percent and 188,000 jobs to be created.
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.
The addition of just 103,000 new jobs in March to the U.S. economy marked the smallest increase since last fall and well below the 170,000 forecast by economists polled by MarketWatch. But the latest report on employment still shows the tightest labor market in nearly two decades.
“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.”
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Where Job Growth Occurred
- In March, employment in manufacturing rose by 22,000, with all of the gain in the durable goods component. Employment in fabricated metal products increased over the month (+9,000). Over the year, manufacturing added 232,000 jobs. The durable goods component accounted for about three-fourths of the jobs added.
- Healthcare added 22,000 jobs, about in line with its average monthly gain over the prior 12 months. Employment continued to trend up over the month in ambulatory healthcare services (+16,000) and hospitals (+10,000).
- Employment in mining increased by 9,000 in March, with gains occurring in support activities for mining (+6,000) and in oil and gas extraction (+2,000). Mining employment has risen by 78,000 since a recent low in October 2016.
- Employment in professional and business services continued to trend up in March (+33,000) and has risen by 502,000 over the year.
- Retail trade employment changed little in March (-4,000), after increasing by 47,000 in February. Employment declined by 13,000 in general merchandise stores, offsetting a gain of the same size in February. Over the year, employment in retail trade has shown little net change.
- In March, employment in construction also changed little (-15,000), following a large gain in February (+65,000).
- Employment changed little over the month in other major industries, including wholesale trade, transportation and warehousing, information, financial activities, leisure and hospitality, and government.
Strong Hiring Intentions to Continue Into Second Quarter
U.S. employers are expecting hiring to pick up in the second quarter, with one in five planning to add staff, according to the latest “Employment Outlook Survey,” by ManpowerGroup. Employers in all U.S. regions and industry sectors are looking for headcount to grow.
“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.”
“We are in a period of intense demand for executive talent,” said Robert Nephew, founder and managing partner of search firm RM Nephew and Associates, which specializes in the technology, professional services and healthcare sectors. “Nearly every executive we are talking to about positions with our clients has one or more competing opportunities to consider.”
“This is a complete change from one year ago,” said Mr. Nephew. “We are also seeing our clients acknowledge and respond to this development by becoming more proactive about keeping hold of their existing executive talent. Some clients are implementing new retention packages. Others are asking us in confidence about our observations of the stability of their leadership teams.”
“I feel that the economy is in a very good state,” said Patricia Lenkov, founder and president of New York-based Agility Executive Search. “Unemployment is at a very low level and the recent tax cut will generate more investments by companies, more jobs and more disposable income. Business and consumer confidence is also high. It is not perfect because certain sectors, such as retail, are challenged. But overall I feel good about the prospects for the immediate future.”
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