Insights and Perspectives

April 2021 Job Growth Unexpectedly Sluggish

Fri, 07 May 2021 19:23:00 GMT

The Bureau of Labor Statistics (BLS) released its monthly Current Employment Statistics (CES) report and Current Population Survey (CPS) for April 2021 on Friday, May 7^th. The monthly change in employment given by the CES and the unemployment rate from the CPS are seen as the standard gauges for assessing the health of the U.S. labor market. The results mark 14 months since the Covid-19 economic lockdown and surprised most forecasters with its interruption of anticipated strong job growth of at least one million. While strong job growth is still expected over the next year, April demonstrates that month-to-month figures will be uneven as the labor market reestablishes itself post-pandemic.

Employment in the U.S. rose by 266,000 jobs, only a fraction of the 1.6 million jobs expected in the Geographic Solutions, Inc. forecast. The WSJ Economist Survey forecast at 1.0 million jobs was closer but still nearly four times actual employment. The overestimation of jobs was partially due to excessive weight placed on full vaccination rates which went from 10.7% on March 12^th to 22.6% on April 12^th, the date the labor market survey is conducted. March job growth fell from 916,000 to 770,000. January was originally reported at 379,000 new jobs but finalized at 536,000, underscoring the elevated volatility and unpredictability of employment. The Geographic Solutions forecast was derived from internal data on the number of job openings, job severances, and job searchers. The forecast used unemployment claims data from the U.S. Department of Labor (USDOL) as an external indicator in the forecast.

The unemployment ticked up to 6.1%, above the Geographic Solutions and WSJ forecasts of 5.7% and 5.8%, respectively. The unemployment rate forecast used internal data on job openings, job severances, job searchers, and the number of applications for unemployment benefits filed on Geographic Solutions state client sites. The forecast uses unemployment claims data from the USDOL.

Explosive job growth was expected in the service-providing sector but subdued increases in the goods-producing sector. Instead, the goods-producing sector lost jobs (-16,000) and service-providing job growth was soft (+282,000).

Job declines were most pronounced in Trade, Transportation, & Utilities (-81,000), most likely the consequence of static goods-sector employment activity which is closely linked to employment in transportation and logistics. Professional & Business Services (-79,000) had similar losses, mostly dragged down by a severe drop in temporary administrative jobs (-111,000). The positive interpretation is that many of these temporary workers are encouraged by their chances of getting a permanent job, and are quitting temp positions to focus on that.

The Leisure & Hospitality sector in April was the only one with job increases in line with the explosive job growth expected as the vaccines are distributed. It totaled 311,000 new jobs. Leisure & Hospitality employment continues its climb, but it has a long way to go before completing its recovery. Its employment remains 16.8% below February 2020. No other major industry has employment more than 10% below its February 2020 total.

The U-3 unemployment rate is the standard form of measuring unemployment in the U.S. labor market and includes those that are actively seeking a job but unable to find one. The U-3 unemployment rate increased slightly to 6.1% from the previous month.

The labor force participation rate increased to 61.7% from the previous month. The more expansive U-6 unemployment rate counts discouraged workers who are no longer actively seeking work (and therefore no longer in the labor force) and those that have settled for part-time employment but desire a full-time job. This measure of unemployment fell 0.3% to 10.4%. The increasing U-3 rate along with a declining U-6 rate demonstrates that previously discouraged job-seekers are jumping back into the labor market.

Bluntly stated, the April labor market report was a shocker. Despite news of shortages in semiconductors slowing manufacturing, lumber prices as a dragging force on construction, and supply chain issues, overall demand for labor is high. U.S. job openings in February 2021 were 7.4 million plus hourly earnings and average weekly earnings jumped in April. It appears that going forward that employment changes will mostly depend on the labor supply, and its ability and willingness to meet the robust demand in the labor market.

May 2021 Job Growth Continues Sluggish Pattern

Sun, 04 Apr 2021 19:16:00 GMT

The Bureau of Labor Statistics (BLS) released its monthly Current Employment Statistics (CES) report and Current Population Survey (CPS) for May 2021 on Friday, June 4^th. The monthly change in employment given by the CES and the unemployment rate from the CPS are seen as the standard gauges for assessing the health of the U.S. labor market. The results mark 15 months since the Covid-19 economic lockdown and signal reluctance among many of the jobless to return to the labor force. While strong job growth in March indicated the job market was about to take off, the last two months have had disappointing outcomes.

Employment in the U.S. rose by 559,000 jobs, only a fraction of the 2.7 million jobs expected in the Geographic Solutions, Inc. forecast. The WSJ Economist Survey forecast at 671 thousand jobs was closer. The overestimation of jobs was partially due to a surge in job applications on Geographic Solutions websites that indicated greater enthusiasm to find employment. Job applications data had its highest monthly percent increase since May 2020 when the U.S. created 2.8 million jobs. The Geographic Solutions forecast was derived from internal data on the number of job openings, job severances, job searchers, and job applications.

The unemployment rate declined to 5.8%, above the Geographic Solutions forecast of 5.6% and below the WSJ forecast of 5.9%. The unemployment rate forecast used internal data on job applications, job severances, and the number of applications for unemployment benefits filed on Geographic Solutions state client sites. The forecast uses unemployment claims data from the USDOL.

Explosive job growth was expected in the service-providing sector but subdued increases in the goods-producing sector. Instead, the goods-producing jobs were flat (+3,000) and service-providing job growth was soft (+556,000).

Job declines were most pronounced in Construction (-20,000), most likely the consequence of rising costs of supplies such as lumber. Job market gains came from a strong performance in the Leisure & Hospitality sector in May that totaled 292,000 new jobs, an encouraging sign for the most beleaguered sector since the onset of the pandemic.

The Leisure & Hospitality sector in May was the only one with job increases in line with the explosive job growth expected as the vaccines are distributed. Leisure & Hospitality employment continues its climb, but it has a long way to go before completing its recovery. Its employment remains 15% below February 2020. No other major industry has employment more than 10% below its February 2020 total.

The labor force participation rate declined slightly to 61.6% from the previous month. The more expansive U-6 unemployment rate counts discouraged workers who are no longer actively seeking work (and therefore no longer in the labor force) and those that have settled for part-time employment but desire a full-time job. This measure of unemployment fell 0.2% to 10.2%. Declining unemployment rates without robust job growth demonstrates that job-seekers are becoming discouraged and leaving the labor force.

The May labor market report was a disappointment and is likely to reignite debate on whether extended unemployment benefits are preventing some from re-entering the workforce. When state employment numbers for May are released later this month, it will be interesting to see if there are noticeable differences among the states who are limiting unemployment benefits and those that are not. The labor market remains 8.2 million jobs below its February 2020 level. The pace of hiring will need to pick up to avoid the recovery taking years to complete.

March 2021 Growth Returns to Scale of Early Recovery

Fri, 02 Apr 2021 19:03:00 GMT

The Bureau of Labor Statistics (BLS) released its monthly Current Employment Statistics (CES) report and Current Population Survey (CPS) for March 2021 on Friday, April 2^nd. The monthly change in employment given by the CES and the unemployment rate from the CPS are seen as the standard gauges for assessing the health of the U.S. labor market. The results mark 13 months since the Covid-19 economic lockdown and signal that job growth is approaching one million per month which has not been seen since the first few months of the pandemic recovery. Strong growth will continue as more Covid-19 vaccinations are administered throughout 2021.

Employment in the U.S. rose by 916,000 jobs, nearly double the 462,000 jobs expected in the Geographic Solutions, Inc. (GSI) forecast. The WSJ Economist Survey forecast at 675,000 jobs was closer but still short by more than 35%. The lower miss by the GSI forecast was partially due to an over-consideration of the delays and disruptions in supply chains that occurred over the last month. Explosive job growth was expected in the service-providing sector but subdued increases in the goods-producing sector. January and February 2021 also experienced large upward revisions. February job growth increased from 379,000 to 462,000. January was originally reported at 49,000 new jobs but finalized at 233,000, underscoring the elevated volatility and unpredictability of employment. The GSI forecast was derived from internal data on job severances and the number of applications for unemployment benefits filed on GSI state client sites. The forecast used unemployment claims data from the U.S. Department of Labor (USDOL) as an external indicator in the forecast.

The unemployment rate fell to 6.0%, matching the WSJ’s estimate and a little under GSI’s estimate of 6.3%. The unemployment rate forecast used internal data on job openings, job severances, job searchers, and the number of applications for unemployment benefits filed on GSI state client sites. The forecast uses unemployment claims data from the USDOL.

Contrary to expectations, goods-producing industries had its largest increase in employment since June 2020. Employment in the service-providing industries continues to accelerate.

Job market gains came from a strong performance in the Leisure & Hospitality sector in March that totaled 280,000 new jobs, an encouraging sign for the most beleaguered sector since the onset of the pandemic. Construction jobs also provided a significant source of growth, increasing 110,000. After Government lost jobs in February, it added 136,000 in March, buoyed by state and local education.

Leisure & Hospitality employment continues its climb, but it has a long way to go before completing its recovery. Its employment remains 18.5% below March 2020. No other major industry has employment more than 10% below its March 2020 total.

The labor force participation rate edged up to 61.5% from the previous month. The more expansive U-6 unemployment rate counts discouraged workers who are no longer actively seeking work (and therefore no longer in the labor force) and those that have settled for part-time employment but desire a full-time job. This measure of unemployment fell 0.4% to 10.7%. The declining U-3 rate along with a sustained or increasing labor force participation rate demonstrates that more unemployed persons, both discouraged and job-seeking, are becoming employed.

Overall, the March labor market report shows that we have entered a new phase in the recovery that returns to the job increases of summer 2020. Approximately 15% of the U.S. population is fully vaccinated from Covid-19. As vaccinations proliferate and consumers feel more comfortable venturing out, job growth will improve across the board. Leisure & Hospitality will especially grow when the summer tourism season arrives.

Jobs Pick up in February 2021

Fri, 05 Mar 2021 19:44:00 GMT

The Bureau of Labor Statistics (BLS) released its monthly Current Employment Statistics (CES) report and Current Population Survey (CPS) for February 2021 on Friday, March 5^th. The monthly change in employment given by the CES and the unemployment rate from the CPS are seen as the standard gauges for assessing the health of the U.S. labor market. The results mark 12 months since the Covid-19 economic lockdown and signal the labor market recovery is gaining steam after moving into a lull at the end of 2020. Strong growth should reassert itself as more Covid-19 vaccinations are administered later in 2021.

Employment in the U.S. rose by 379,000 jobs, quite a bit higher than the 273,000 jobs expected in the Geographic Solutions, Inc. (GSI) forecast. However, the forecast still outperformed the WSJ Economist Survey forecast of 210,000 jobs. The lower miss by the GSI forecast was partially due to factoring in the effects of the cold weather and power outages in the Midwest and heartland. January 2021 also experienced a large upward revision from 49,000 to 166,000 new jobs, demonstrating the elevated volatility of employment. The GSI forecast was derived from internal data on job openings, job severances, and the number of applications for unemployment benefits filed on GSI state client sites. The forecast used unemployment claims data from the Department of Labor as an external indicator in the forecast.

The unemployment rate fell to 6.2%, just under the GSI and WSJ forecasts of 6.4% and 6.3%, respectively. The unemployment rate forecast used the same indicators as the employment forecast.

Goods-producing industries established a stronger initial recovery but have experienced job loss both in January and February 2021. The good news is that service-providing jobs, which make up the bulk of the labor market, accelerated in January and February and are set to improve on this momentum later this year.

Job market gains came from a strong performance in the Leisure & Hospitality sector in February that totaled 355,000 new jobs, an encouraging sign for the most beleaguered sector since the onset of the pandemic. Professional & Business Services jobs also provided a significant source of growth, increasing 63,000. After Government was the second-leading job producer in January, it lost more jobs than any other sector (-86,000). Seasonal expectations of state and local hiring in education seem to have fallen short and contributed the most to the fall in employment in the public sector.

Despite Leisure & Hospitality’s upbeat results in February 2021, it has a long way to go before completing its recovery. Its employment remains 20.4% below February 2020, more than twice the remaining percentage of any other major sector.

The labor force participation rate basically held steady at 61.4% from the previous month. The more expansive U-6 unemployment rate counts discouraged workers who are no longer actively seeking work (and therefore no longer in the labor force) and those that have settled for part-time employment but desire a full-time job. This measure of unemployment remained at 11.1%. The declining U-3 rate along with a sustained or increasing labor force participation rate demonstrates that more unemployed persons are becoming employed.

Overall, the February labor market report indicates that consumers are more comfortable venturing out and resuming some of their pre-pandemic spending habits. We expect for this trend to rapidly increase in the coming months as vaccinations increase and Covid-19 cases decrease. The Biden Administration announced that the U.S. will have enough vaccinations for every adult by the end of May 2021. The hope is that June 2021 employment will return to the more than one million job growth pattern not seen since August 2020.

Return to Modest Growth to Start 2021

Fri, 05 Feb 2021 16:28:00 GMT

The Bureau of Labor Statistics (BLS) released its monthly Current Employment Statistics (CES) report and Current Population Survey (CPS) for January 2021 on Friday, February 5th. The monthly change in employment given by the CES and the unemployment rate from the CPS are seen as the standard gauges for assessing the health of the U.S. labor market. The results mark 11 months since the Covid-19 economic lockdown and signal the labor market recover is continuing to move sideways after strong growth from May through October 2020. Strong growth should reassert itself as more Covid-19 vaccinations are administered later in 2021.

Employment in the U.S. rose a modest 49,000 jobs, almost exactly in line with the 50,000 jobs expected in the Geographic Solutions, Inc. (GSI) forecast. The forecast tied the WSJ Economist Survey which also predicted an increase of 50,000. The GSI forecast was derived from internal data on job severance counts and the number of applications for unemployment benefits filed on GSI state client sites. The forecast used unemployment claims data from the Department of Labor as an external indicator in the forecast.

The unemployment rate fell to 6.3%, just under the GSI and WSJ forecast of 6.7%. The unemployment rate forecast used the same indicators as the employment forecast.

Goods-producing industries have typically outperformed the service-providing industries during the lockdown, even growing in December as overall jobs declined. January marks the first month since April that goods-producing jobs fell by 4,000. However, the service-providing jobs more than compensated, expanding by 53,000 during the month.

Job market gains came from a strong performance in the Professional & Business Services sector in January that totaled 97,000 new jobs. Public-sector jobs also provided a significant source of growth, increasing 43,000. After the Trade, Transportation, & Utilities industry was the leading job producer in December, it lost more jobs than almost any other industry (-50,000). This may be partially explained by how the pandemic has thrown off seasonal factors as consumers accelerated their preference for online retail during the holiday season.

Leisure & Hospitality continues to languish as we await the vaccine and consumers pull back due to the cold weather over the last couple of months. Its employment remains 22.9% below February, more than twice the remaining percentage of any other major sector.

The unemployment and labor force numbers come from the Current Population Survey which just updated its population estimates in January. Therefore, we should take comparisons to the previous months a little more lightly than usual. The U-3 unemployment rate is the standard form of measuring unemployment in the U.S. labor market and includes those that are actively seeking a job but unable to find one. The U-3 unemployment rate declined to 6.3% from the previous month.

The labor force participation rate basically held steady at 61.4% from the previous month. The more expansive U-6 unemployment rate counts discouraged workers who are no longer actively seeking work (and therefore no longer in the labor force) and those that have settled for part-time employment but desire a full-time job. This measure of unemployment ticked down last month by 0.6% to 11.1%. The larger decline in the U-6 unemployment rate shows that a higher share of the unemployed have come off the sidelines and are once again looking for work.

While another federal stimulus would help some cash-strapped consumers boost the economy, the real bounce-back depends on the distribution of the Covid-19 vaccines. When the vaccination rate is high enough, consumers will feel sufficiently comfortable to return to their pre-pandemic spending habits. The vaccination rates among the states will be a key factor we track to look at the trajectory of employment and other labor market data.

Leisure & Hospitality Continues to Struggle, but Vaccines Offer Hope for 2021

Fri, 08 Jan 2021 16:01:00 GMT

The Bureau of Labor Statistics (BLS) released its monthly Current Employment Statistics (CES) report and Current Population Survey (CPS) for December 2020 on Friday, January 8th. The monthly change in employment given by the CES and the unemployment rate from the CPS are seen as the standard gauges for assessing the health of the U.S. labor market. The results mark 10 months since the Covid-19 economic lockdown and signal a stall in the labor market recovery, which began in May 2020. The December jobs report caps a year that experienced the worst job loss on record (-9.4 million). The good news is that as more Covid-19 vaccinations are administered, we should see a jump start in the recovery take place later in 2021.

Employment in the U.S. declined as expected in the Geographic Solutions, Inc. (GSI) forecast. The contraction was a bit more than estimated with the GSI prediction of 23,000 and the 140,000 actual job loss in December. The forecast outperformed the WSJ Economist Survey which predicted an increase of 50,000. The GSI forecast was derived by using its internal raw numbers on job openings, complete and incomplete UI applications, and job severance dates listed on the UI applications. Covid-19 case counts and UI claims from the Department of Labor were the two external indicators inserted into the forecast.

The unemployment rate remained at 6.7%, just under the GSI and WSJ forecast of 6.8%. This GSI forecast pulled UI claims series from two client states and relied on Covid-19 case counts.

December jobs in goods-producing industries finished the year strong, increasing by 93,000. While impressive, the addition was not enough to compensate for even half of the 188,000 jobs lost in service-providing industries.

The job market losses were chiefly driven by a severe contraction in the Leisure & Hospitality sector in December that totaled a 498,000 jobs loss. Leisure & Hospitality employment is the most sensitive industry to Covid-19 cases and government response measures. Therefore, its poor performance was somewhat anticipated from the spike in cases throughout some parts of the country. Trade, Transportation, & Utilities employment grew the most of any other sector, and unlike November, its growth was spread among all its subsectors.

The graph below illustrates just how much Leisure & Hospitality continues to struggle compared to other industries. Its employment remains 23.2% below February, more than twice the remaining percentage of any other major sector.

The labor force participation rate also maintained its 61.5% rate from the previous month. It is somewhat unusual to see a month with both a job loss and a steady unemployment rate also have a labor force participation rate that remains the same. Job loss combined with a steady or falling unemployment rate typically signals that the unemployed are becoming discouraged and dropping out of the labor force altogether. This would have the expected effect of reducing the labor force participation rate. However, the CPS survey gathers its own employment data and includes those who are self-employed or work in the “gig economy” (ex: Uber drivers). The CPS calculates that employment stayed roughly the same under this method.

The more expansive U-6 unemployment rate counts discouraged workers who are no longer actively seeking work (and therefore no longer in the labor force) and those that have settled for part-time employment but desire a full-time job. This measure of unemployment ticked down last month by 0.3% to 11.7%. December’s labor market churn resulted in a lower share of the unemployed who are discouraged and not actively seeking work.

While December’s labor market report is disappointing, there are signs that economic conditions will improve within the next few months. The $900 billion in Federal aid signed into law at the end of 2020 and possible further assistance after the new administration is in office will provide relief for the unemployed and businesses and will serve as a modest stimulus during this trailing off period in the job market. However, the real bounce-back will happen when Covid-19 vaccines are widely available and restrictions on activity are lifted.