VetJobs – VESR (Veterans Employment Situation Report)
July 2015
EMPLOYMENT SUMMARY
Editorial Overview
The news with today’s unemployment report from the Bureau of Labor Statistics (BLS) is that as in May, only 223,000 new jobs were created in June. The national unemployment rate declined to 5.3%, but the decline was primarily due to the fact that the labor force shrank by more than 400,000. To lower a percentage, one changes the denominator. By saying 400,000 dropped out of the labor force, the unemployment rate fell.
223,000 is not a strong number as most analysts point to needing 250,000 to 300,000 new jobs a month be created in order to have real growth given the size of the American economy. This is not happening in the United States at this time. Bruce Steinberg notes that that the 223,000 numbers was not as strong as the 254,000 gain in May nor the 286,000 increase a year ago in June 2014.
The veteran unemployment rate fell from 5.0% in May to 4.4% in June, a healthy decline of .6%.
The good news is the national unemployment rate of 5.3% is the lowest in seven years. However, when one considers the dropout rate and other factors, the “real” unemployment rate is over 10.0%. Basically, when counting those in the work force or those who want or could work, over one in every ten people in America is unemployed.
More good news is the average hourly earnings of all employees on private nonfarm payrolls over the past 12 months have risen by 2.0%. Average hourly earnings of all employees on private nonfarm payrolls were unchanged at $24.95 in June.
>From May 2014 to May 2015, the Consumer Price Index for All Urban Consumers (CPI-U) was unchanged (on a seasonally adjusted basis).
Adding to the sluggish economic growth rate, BLS reports after incorporating the revisions for April and May, which decreased nonfarm employment by 60,000, monthly job gains have averaged 221,000 over the past 3 months.
More good news is that employment increased in professional and business services, health care, retail trade, financial activities, and in transportation and warehousing. For those seeking work, these could be lucrative areas to find a job.
Bruce Steinberg, the country’s leading temporary help analyst, reports that in June, the 2,914,700 temporary help services jobs were a result of growth of 19,800 jobs, which was improved sequential growth of 0.7% and 5.7% year-on-year growth. As the growth in the number of Temporary help services jobs continues along a fairly steady trend, it is starting to look like the declines in January and February were simply the result of abnormal growth in November and December of 2014.
Steinberg also notes that the temporary help service’s market share — that is its portion of all jobs — jumped to 2.05% in June, which was a 0.0107 percentage point rise (a relatively large jump) from May’s 2.04%. June’s 2.05% market share (bringing it out a few decimal points, it was 2.0549) is the highest it’s ever been.
Of serious economic concern is the labor force participation rate. The labor force participation rate declined by 0.3% to 62.6% in June, the lowest level in nearly forty years. It cannot be emphasized enough that one cannot build a successful viable economy with a consistently low and declining labor force participation rate. This rate indicates that nearly 40% of those eligible to work are unemployed or have dropped out of the workforce. For a comparison, England, which under the Conservative Party that recently won re-election, is moving rapidly from a socialist model to a free market model. The result is that England’s labor force participation rate has risen from the low 50% range to a 74.0% labor participation rate. There may be a lesson in what has happened in England.
The employment-population ratio was essentially unchanged in June at 59.3% and has shown little movement thus far in 2015. Like the labor force participation rate, a low employment-population ratio is not indicative of a dynamic or growing economy.
In other business news, Reuters reports the U.S. economy contracted in the first quarter but less than previously estimated as the economy struggled with bad weather, a strong dollar, spending cuts in the energy sector and disruptions at West Coast ports. Growth, however, has since rebounded in the second quarter as the temporary drag from unusually heavy snowfalls and the ports dispute faded. Retailers reported strong sales in May and employers appear to be stepping up hiring. Housing is also strengthening and manufacturing activity is beginning to stabilize.
The Commerce Department said gross domestic product shrank at a 0.2% annual rate in the January-March quarter instead of the 0.7% pace of contraction it reported last month. A fairly stronger pace of consumer spending and inventory accumulation than previously estimated accounted for the upward revision to GDP.
Business investment spending was less weak than the government had estimated last month. Consumer spending, which accounts for more than two thirds of U.S. economic activity, was raised to a 2.1% growth pace from the 1.8% rate reported in May. With more Americans getting a paycheck and a tightening labor market finally spurring stronger wage growth, consumer spending could accelerate in the second quarter. Spending could also get a boost from rising household wealth as home prices accelerate.
Personal savings increased at a robust $720.2 billion pace in the first quarter. Though export growth was revised higher, that was offset by an upward revision to imports, leaving a still-large trade deficit that subtracted almost 2 percentage points from GDP. U.S. stocks were trading slightly lower as debt negotiations between Greece and its foreign creditors hit a snag. The dollar was little changed against a basket of currencies, while prices for longer-dated U.S. Treasury debt rose.
To sum things up, the economy is growing but at a very sluggish, anemic rate. There are not enough new jobs to pull the huge number of people who have dropped out back into the economy.
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