The recent labor report from the BLS brings back memories of the Clint Eastwood classic, “The Good, the Bad, and the Ugly.”
The Good – In February, March, and April an average of 220,000 jobs were added each month.
The Bad – In May the original estimate was that 54,000 jobs had been added. It was hoped that the downward trend would simply be a bump in the road.
The Ugly – The number of jobs created for May was revised downward to 25,000 with an addition of 18,000 in June.
These are not the kind of job gains that economic recoveries are built on. It is estimated that 100,000 to 125,000 jobs must be added each month to prevent unemployment from rising. If you account for the number of older workers who have remained in the workforce, that number might be bumped to 150,000 to 175,000. It is necessary to add between 200,000 and 225,000 jobs each month, on a sustained basis, to lower the unemployment rate.
The private sector posted gains of 57,000, while budget strapped governments reduced their payrolls by 39,000. The net is +18,000 employees.
The financial sector declined by 15,000 followed by construction at 9,000 workers. In addition, the temporary help services sector shed 12,000 workers. The sector, which is often considered a harbinger of broader hiring, declined for the third consecutive month.
On the positive side of the ledger the most significant sector gains were as follows:
• Leisure and hospitality 34,000 employees
• Health care and social assistance 17,400 employees
• Professional and business services 12,000 employees
• Wholesale trade 7,100 employees
• Manufacturing 6,000 employees
• Retail trade 5,200 employees
• Other services 5,000 employees
• Transportation and warehousing 3,600 employees.
Note: Not all sectors are included in the above overview.
While there is optimism for improved economic activity in the second half of the year, the reports cast doubts about job expectations. Employment growth appears to be nothing more than a necessary evil in the new economy that is driven by technology, globalization, a housing bust, and struggling financial markets.
Clint Eastwood, where are you when the country need you the most?
©Copyright 2011 by CBER.