Tag: Jobs

Tepid Job Growth Continues

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When the Bureau of Labor Statistics announced (June 7th) that 175,000 jobs were added in May the stock market rose by 200+ points.  While the number of jobs added in May exceeded expectations, a significant downward revision in April offset those gains.

Said differently, the number of jobs added in May was comparable to the monthly average for 2011.  It is difficult to explain how that level of job growth could drive the market up.

The good news is that jobs are being added at a steady, albeit tepid pace.

On average, the U.S. has added 189,200 jobs per month in 2013. This compares to +185,000 workers in 2012 and +175,000 workers in 2011.  In other words, job growth continues to be lackluster, but well above the average for 2010 (+85,000) and 2009 (-421,000).

At this rate, U.S. employment will return to the 2008 peak some time in 2014.

©Copyright 2011 by CBER.

Large Establishments Have Added More Workers than Small Establishments Since End of Recession

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The latest ADP data shows that large companies (500+ workers) have added more private sector jobs than small companies (fewer than 20 workers) since the end of the recession.  More specifically,

  • Employment at establishments with fewer than 20 workers is 25.9% of total private sector employment. These establishments have accounted for 18.7% of total jobs added, or 1.0 million jobs.
  • Employment at establishments with 20 to 499 workers is 51.6% of total employment. These establishments have accounted for 53.6% of total jobs added, or 3.0 million jobs.
  • Employment at establishments with 500+ workers is 22.5% of total employment. These establishments have accounted for 27.7% of total jobs added, or 1.5 million jobs.

Since the end of the recession, 5.5 million private sector jobs have been added.

Since the series began in 2005, the small companies have added more workers than the large companies. More specifically,

  • Employment at establishments with fewer than 20 workers has increased by 1.9 million workers.
  • Employment at establishments with 20 to 499 workers has increased by 1.8 million.
  • Employment at establishments with 500+ workers has decreased by 1.1 million.

Private sectors jobs have increased by 2.6 million since the beginning of 2005.

Over the past 8 years, the small, medium, and large establishments have contributed to the economy in different ways.

©Copyright 2011 by CBER.

Recovery from Recession Led by Large Companies

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Large and small companies have had different employment patterns over the past 7-8 years.

According to employment data produced by ADP, about 17.6% of total private sector workers were employed at small companies, those with 1 to 19 workers, in January 2005. Companies with 500+ workers accounted for 17.1% of private sector employment.

Between 2005 and April 2013 the small companies expanded at a faster rate. The most recent ADP data shows the smaller companies currently account for 18.3% of private sector workers and the larger companies account for 15.9%.

The small companies had the least number of workers in January 2005. Jobs were added until July 2008, when they peaked. Employment tapered off slowly until December 2010. The number of jobs has been on the rise since.

Employment at larger companies increased slowly from January 2005 until March 2006. At that time employment began to taper off and declined for six years. Steady increases have occurred since March 2010.

The Great Recession officially ended in June 2009. Since then the small companies have added about 1.03 million workers and the large companies have added about 1.58 million.  In other words, large companies have played a greater role in the recovery than the small companies.

©Copyright 2011 by CBER.

Colorado Adds 62,600 Jobs in Q1 2013

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A review of 22 NAICS sectors shows that on average, Colorado added 62,600 jobs in Q1 compared to the same period last year.  Only four of the sectors posted losses (Information 1,800; Federal Government 900; Natural Resources 600; and State (Not Higher Education) 100.

The following sectors added jobs at a faster level, Q1 2013 vs. 2012:
Accommodations and Food Services; B-to-B (Not Employment); Retail Trade;  Construction;  K-12 Education;  Wholesale Trade; Health Care; Arts Entertainment, and Recreation; and Other Services.

The following sectors added jobs at the same level, Q1 2013 vs. 2012:
Corporate Headquarters (MCE), Local (Not Higher Education), and State (Not Higher Education).

The following sectors added jobs at a slower level, Q1 2013 vs. 2012:
Private Education; Information; Employment Services; Transportation, Warehousing, and Utilities;  Higher Education; Financial Activities; Federal Government; Manufacturing; Professional, Scientific, and Technical; and Natural Resources and Mining.

While it is great news that most sectors are adding jobs, it may be cause for concern that many of the state’s primary job creators have fallen in the latter category – adding jobs at a level slower than 2012.

©Copyright 2011 by CBER.

“Our Businesses Have Created Over Six Million Jobs” – True, But…

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In his State of the Union speech, President Obama stated, “After years of grueling recession, our businesses have created over six million new jobs.”

The jobs data produced by BLS tells at least four accurate, but different stories about the state of U.S. private sector employment.

1. The trough of the recession occurred in February 2010. About 6,111,000 private sector jobs were added between February 2010 and January 2013.

2. When President Obama took office in January 2009, private sector employment was 111,048,000. In January 2013, it was only 113,111,000. During the first four years of President Obama’s presidency, private sector employment increased by about 2 million workers.

3.  In December of 2000 private sector employment peaked at 111,776,000. The recovery from the 2001 recession took 54 months, or until June 2005, to return to its 2000 peak. The rebound continued until January 2008 when private sector employment peaked at 115,668,000. Just over 8.8 million jobs were lost between then and February 2010 when private sector employment bottomed out at 106,850,000, well below the peak in 2000. Specifically, in January 2009, employment dropped below the 2000 peak. Forty three months later, mid-2012, the number of jobs again exceeded the 2000 peak. At the time President Obama gave his 2013 State of the Union speech private sector employment was only about 1.2 million jobs greater than the peak in 2000.

4.  Private sector employment will not reach 2008 peak employment until mid-2014. In other words it will take about 72 months, or 6 six years for full recovery of the private sector from the 2008 recession.

The wisdom of Darrell Huff, author of How to Lie with Statistics, should be heeded when reviewing data produced by political leaders, economists, and business leaders.  Statistics can tell many stories.

©Copyright 2011 by CBER.

Five False Starts – Will Strong Sustained Job Growth Occur in 2013?

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Over time, recoveries from recessions have mirrored the downturn, i.e. a steep recovery usually follows a sharp downturn. That was not the case with the 2001 or 2007 recession.

Nationally, the economy was too weak to support job growth, as evidenced by the four false starts in seasonally adjusted job growth.
• An average of 315,000 jobs was added for the three month period March to May 2010. This gain can be attributed to temporary Census workers.
• An average of 239,000 jobs was added for the three month period February to April 2011.
• An average of 252,000 jobs was added for the three month period December 2011 to February 2012.
• An average of 168,000 jobs was added for the three month period July 2012 to September 2012 – it is debatable whether this job growth to strong enough to be classified as a false start.

In Colorado, there have been five false starts since the end of the recession
• An average of 4,000 jobs was added for the seven month period February to July 2010 (One month showed declines). This anomaly was temporary Census workers.
• An average of 4,200 jobs was added for the four month period October 2010 to April 2011.
• An average of 4,300 jobs was added for the four month period July to October 2011.
• An average of 8,400 jobs was added for the three month period January to March 2012. This can be attributed to a large increase in construction workers.
• An average of 8,000 jobs was added for the three month period September to November 2012.

Most national forecasts project a slowdown in the economy during the first half of 2013. If that is the case, then the rally in the second half of 2012 will be wasted.

Will 2013 be the year that Colorado has strong sustained growth?
©Copyright 2011 by CBER.

Most Recent Labor Report Not What Incumbents Want to Hear

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The October 5th Bureau of Labor Statistics press release was disappointing, particularly for incumbents in the upcoming elections. The report indicated that the U.S. added only 114,000 nonfarm jobs in September. It stated, “Employment increased in health care and in transportation and warehousing but changed little in most other major industries.” While job creation is important, the expansion of these industries does little to create jobs in other sectors.

The recent update also indicated that there are 12 million Americans out of work. Four years ago that number was 9.5 million and 6 years ago it was 6.8 million. The fact that the unemployment rate edged downward to 7.8% seems somewhat irrelevant given this data.

The data can be looked at from a slightly different perspective. That view indicates that the nation has regained about half the jobs lost as a result of the Great Recession. Ugh!

The private sector added 104,000 jobs for the month, while government employment added 10,000 workers. This is the second month in a row for increased government employment. While some have an unfavorable view of job gains in the public sector, in this case, it may be a positive indicator that state and local revenue streams have improved.

The BLS announcement was preceded by the ADP employment report which stated that private nonfarm employment had risen by 162,000 in September, 189,000 in August, and 156,000 in July. At this point, ADP is clearly more optimistic about the recovery than the BLS.

On average, Colorado nonfarm employment comprises about 1.72% of the U.S. total. If Colorado grows at the same pace as the U.S., the state data will gain about 2,000 jobs in September. We’ll see what BLS says in their monthly update on October 19th.

©Copyright 2011 by CBER.

Have Budget Cuts Negatively Impacted the Public School System?

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A complete answer to this question requires more than a couple hundred words and two charts. On a positive note, K-12 jobs are still being added and assessment scores are above the national norm.

Are jobs being added fast enough, i.e. do the number of new teachers match the increase in students? Are teachers being replaced by teacher aides? Are key administrators being replaced by less experienced and knowledgeable staff? Are deserving professionals not receiving appropriate merit increases? Do the number of employees translate into quality education?

Colorado K-12 public education employment has fared better than the U.S. for the past three years. A review of the 12-month rolling average shows that Colorado employment dropped off from mid-2010 to mid-2011, but has added jobs since. On the other hand, U.S. K-12 public education employment has declined since mid-2009. Undoubtedly many Coloradans may feel the situation could be improved, but it appears to be better than the national trend.

Another area to look at is assessment scores, in particular the National Assessment of Educational Progress (NAEP). NAEP scores show that Colorado 4th grade scores are in the top 18 states for Reading, Math, and Science. Colorado’s eighth grade scores are in the top 10 states for these same subject areas.

Do strong NAEP scores correlate to high graduation rates? Do they mean students won’t need remedial classes if they take college classes? Are they an indicator that students are being educated to perform basic skills in the workplace?

Based on these two data sets, it appears that Colorado is making an effort to staff their K-12 programs as best as possible and that performance, based on NAEP, is better than the national norm. Arguably, other statistics may show the need for improvement, but data in these two areas suggest that Colorado leaders are taking positive steps in a challenging economic environment to educate our youth.

For additional information on the Colorado go to https://cber.co/CBEReconomy.html.

©Copyright 2011 by CBER.

Colorado Unemployment Rate Up for Fourth Month in a Row

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The Colorado unemployment rate rose for the fourth consecutive month and reached 8.3%. While the BLS indicated that this increase was not statistically significant, it is certainly significant to incumbents seeking re-election in November.

The unemployment rate is a metric that the public pays attention to. They view it as a sign that the economy is not improving – as promised. Specifically, more than 225,000 people are unemployed in Colorado.  The never-ending talk about the fiscal cliff, additional easing by the Federal Reserve, and other doom and gloom projections add to the concerns of the electorate and the woes of incumbents.
The increase to 8.3% is significant for another reason. This is the second consecutive month that the state unemployment rate has matched the U.S. Over the past decade, the Colorado rate has often been a half to a full point lower than the U.S. rate. Seldom has Colorado’s rate been equal to or higher than the nation.

The basic reason for the rise in the rate is that the size of the labor pool increased. In other words, a greater number of people began looking for jobs. Even though the public and private sector have been adding jobs for the past two years, they aren’t being added fast enough to absorb all of the interested workers.

On a positive note, initial job claims are declining. That means there are fewer layoffs.

Continuing claims are also trending downwards – ever so slowly. That means people are either finding work or their benefits have expired. The former is a positive sign, while the latter is not.

The most recent data release shows that after seven months, an average of 40,000 jobs have been added, or about 3,300 jobs per month. Two factors could cause 2012 employment to be less than 2011 (Last year the state added 33,000 jobs).

BLS periodically and systematically revises the unemployment and employment data. Revisions to the data could push the 2012 total downward (an upward revision is unlikely).

As well, there could be a downturn in employment. If employment drops to a monthly average of 23,000 for the last five months then the annual total would be 33,000, or the same as 2011.

The good news is that gross job losses appear have declined, there has been a slight increase in gross job gains, and more people are looking for work. While this scenario is not ideal, it is much better than having a rise in the unemployment rate caused by a drop off in gross job gains and an uptick in gross job losses.

 

©Copyright 2011 by CBER.

Cber.co Colorado Economic Forecast 2012 – Continued Improvement

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The economy is fragile and there are a number of variables that could alter any forecast. At the risk of sounding like a broken record, 2012 will look a lot like 2011. Colorado will experience below average growth for another year. Cber.co is projecting that we will see real GDP growth of 2.1% to 2.5% in 2012, with employment growth of 27,500 to 37,500 in Colorado.  Go to Cber.co for the 2012 Colorado Economic Forecast.

The sectors of the economy can be evaluated in three groups: solid growth, limited growth, and volatile growth. A summary of these analyses for each of the groups follows.

Solid Growth Sectors (About 41% of total employment)

These sectors posted stronger growth in 2011 than any time in the past two decades. Growth will taper off slightly 2012 with the addition of at least 1,500 jobs in each of the following sectors.

Tourism
Private Education and Health Care
Professional and Scientific
Extractive Industries
Wholesale Trade
Employment Services
Higher Education

In total, these sectors will add 26,500 to 32,500 net jobs in 2012.

Limited Growth Sectors (about 26% of total employment)

In 2011 these sectors individually recorded minimal change in their number of employees. Significant change is unlikely in a slow economy.

Personal (Other) Services
Utilities
Retail Trade
Corporate Headquarters (MCE)
State (Not Higher Education)
Manufacturing
Transportation & Warehousing

Combined, these sectors will add 3,000 to 9,000 net jobs.

Volatile Growth Sectors (33% of total employment)
These sectors have either bottomed out, are near the bottom, or have turned the corner. Combined they will shed fewer jobs than in 2011.

Construction
Financial Activities
Information
Federal Government
B-to-B (Not Employment Services)
Local Government (Not K-12)
K-12 Education

Combined, there will be a change of -6,000 to 0 net jobs.

2012 Employment Outlook

Because the economy is still not on a solid foundation, it is reasonable to provide three scenarios for the summation of the above groups: optimistic, most likely, and pessimistic.

Optimistic Scenario
U.S. Real GDP 2.6%+
More than 37,500 Colorado Workers or More

Most Likely Scenario
U.S. Real GDP 2.1 % to 2.5%
+ 27,500 to 37,500 Colorado Workers

Pessimistic Scenario
U.S. Real GDP  1.6% to 2.0%
Less that 27,500 Colorado Workers

If probabilities were to be assigned to each of these scenarios, they would be as follows:
Most Likely   55%
Pessimistic 25%
Optimistic 20%.
At the time the forecast for 2012 was prepared, there was slightly more downside risk.

To access the Cber.co 2012 Colorado Economic Forecast click here.
©Copyright 2011 by CBER.