Fed: Modest Economic Growth; Shortage of Staffing Talent

September 8th, 2016

Reports from the 12 districts of the Federal Reserve suggest that national economic activity continued to expand at a modest pace from July through late August, according to the Federal Reserve Board’s latest report on regional economies (known as the “beige book”). Most districts reported a modest or moderate pace of overall growth. Manufacturing activity rose slightly in most districts. Labor market conditions remained tight, with moderate payroll growth noted; employment expanded at a moderate pace. In many districts, businesses reported trouble filling job vacancies for high-skilled positions, especially for technology specialists, engineers, and selected construction workers. Staffing services businesses in most districts reported a moderate increase in activity. Contacts across the country expect moderate economic growth in the coming months.

Boston

Economic activity continued to increase in the district, although there were scattered signs of slowing growth. Most manufacturing contacts said sales and revenues had increased from a year ago. Business activity in the district’s staffing services industry was mixed—year-to-year revenues were up for a majority of responding firms, with increases ranging from 3% to 30%, but several contacts reported seasonally slow business in the summer. Respondents observed a tight labor market with short supply and strong demand, the latter evidenced by an unusually high number of job postings. They attributed the lack of labor supply to low unemployment and skills mismatch in the labor market, as well as attractive salaries in permanent positions. Looking forward, most firms remained optimistic, though some cited concern over the upcoming November election. They expect continued labor shortages and strong labor demand in the coming months.

New York

There was little to no economic growth in the district since the previous report. Manufacturers reported that business activity was flat; service-sector businesses said that activity declined. The labor market remained tight. Manufacturers and service firms reported little change in staffing levels; service firms scaled back hiring plans in recent weeks, and manufacturers expect staffing levels to be steady to lower in the months ahead. One major New York City employment firm reported that hiring activity remained brisk during the usually slow summer months. Two other firms in the district reported that demand for workers has been steady, at strong levels.

Philadelphia

Aggregate business activity in the district grew slightly, but a bit slower than the modest pace reported during the previous period. Manufacturing contacts reported that overall activity had changed little. General activity fell and then rose during the period, orders rose and then fell, and shipments increased throughout the six weeks. Along with these offsetting trends, firms reported that the number of employees and the average employee work hours continued to fall. Overall hiring slowed. Staffing firms reported a modest increase in activity, manufacturers continued to report job cuts, and other sectors noted mixed trends. Firms expect moderate growth over the next six months—a little higher than they reported for the previous period.

Cleveland

Aggregate business activity in the district grew at a modest pace. Manufacturing output increased, though at a slow rate. Commercial builders reported some weakening in the industry’s strong pace of growth but said they expect that it will be a short-term event. Payrolls were little changed on balance over the period. Job gains in construction and banking were offset by losses in manufacturing and freight hauling. Staffing firms noted an increase in the number of job openings and placements, especially for temporary positions. Wage pressures were most evident in the construction and retail sectors across skill levels.

Richmond

Economic growth in the district slowed. Manufacturing activity was mixed, but firms’ expectations for the next six months were optimistic, and manufacturing employment continued to rise. Commercial leasing increased moderately. Revenues rose somewhat faster at services firms. In the service sector, more retailers were hiring; other firms indicated steady labor demand. The demand for labor increased modestly for workers across all skill levels since the previous report. Turnover rates increased, particularly in entry-level positions. A staffing services firm in Maryland said that some employers were raising starting wages to attract new entry-level workers and to retain existing employees.

Atlanta

According to reports from businesses across the district, economic activity expanded at a modest pace from July through mid-August. The outlook among contacts remained optimistic, as most expect higher growth over the remainder of the year. Manufacturers noted that activity increased slightly since the previous report. Business contacts continued to describe a tightening labor market, with challenges finding workers to fill open positions, particularly in fields that require high skill levels. As a result, contacts from staffing firms noted that demand for recruitment services remained steady. Across the district, firms reported little evidence of wage pressure, and labor costs were generally well contained.

Chicago

Growth in economic activity in the district picked up to a moderate pace, and contacts expect growth to remain moderate over the next six to 12 months. Business spending and manufacturing production grew at a moderate rate. Hiring continued at a modest rate, and contacts said they expected it to strengthen to a moderate pace in the next six to 12 months. Contacts also indicated that competition was growing for lower-skilled workers. Wage pressures were steady overall, with greater pressure for high-skilled occupations than for low-skilled occupations. Nonwage labor costs were little changed. Staffing firms reported no change in billable hours and difficulty filling orders at the wages employers are willing to pay.

St. Louis

Economic conditions in the district improved slightly. Manufacturing activity has been mixed, while activity in the service sector has been positive. Contacts in manufacturing, construction, and wholesale trade continued to report difficulties in finding skilled or qualified candidates to fill job vacancies, either because of a shortage of applicants or because candidates lack the necessary skills. Employers continued to report modest hiring, although with ongoing difficulties finding qualified workers, and wage pressures remain strong. A majority of contacts reported that nominal wages were higher relative to the same time last year, and some reported employment was higher or slightly higher. Contacts expect similar trends to persist over the next quarter. Several firms that provide business support services, information technology services, and education services announced plans to build new facilities and hire new employees.

Minneapolis

The district’s economy grew modestly overall since the previous report. Growth was noted in commercial real estate and professional services. Activity in energy and manufacturing was steady, but commercial construction slowed from high levels. Wage pressures were moderate. Employment grew moderately in spite of tight labor availability—separate call centers in Montana and South Dakota announced plans in late summer to hire new workers over the coming months. However, not all companies have been able to procure needed labor. Hours billed at a Minneapolis-St. Paul staffing firm fell from June through mid-August, which the owner said was “nearly 100% due to lack of available workers.”

Kansas City

Economic activity in the district was largely flat, although expectations remained mostly positive. District manufacturing firms reported modest declines in activity, but expectations for future activity remained positive. Professional and high-tech firms reported moderate increases in activity. Energy activity edged higher from low levels on expectations of higher prices, and the commercial real estate market strengthened slightly. Expectations for the commercial real estate market were for continued moderate expansion. Wages continued to grow modestly in most industries, with some labor shortages reported for selected skilled positions.

Dallas

Economic activity in the district expanded slightly. Manufacturing activity was flat to up. Reports of employment changes were mixed, and prices held steady. Demand for nonfinancial services increased. Staffing services firms said demand picked up, particularly in Dallas, and a slight uptick was seen in Houston as well. Reports of hiring were scattered among service sector companies, with staffing firms adding employees and hiring continuing among leisure and hospitality firms. Several contacts noted a tight labor market for health care professionals, and labor constraints in the construction sector were ongoing. Outlooks were generally positive but cautious, with the upcoming presidential election driving some of the uncertainty.

San Francisco

Economic activity in the district continued to grow at a moderate pace. Overall price inflation remained limited, while upward wage pressures intensified. Manufacturing activity changed little—contacts reported that capacity utilization rates remained slightly low. Activity in the business services sector grew at a moderate pace. Shortages of raw materials and labor somewhat constrained growth in construction activity in some parts of the district. In the broader transportation sector, delivery volumes continued to grow at a brisk pace, particularly for ecommerce. Growing demand for highly skilled workers and technology specialists fueled strong wage growth in the technology, banking, and health care IT sectors. Shortages of physicians and nurses continued to push up wages in the health care industry. Increased demand and the implementation of minimum wage laws in some parts of the district increased wages for lower-skill workers.

Illinois unemployment drops to six-year low

August 14th, 2014

Craig Hinz – Crains Chicago News

August 14, 2014

In news with clear political implications, state officials today announced that the Illinois unemployment rate has dropped for the fifth month in a row, to 6.8 percent — roughly where it was when the great subprime mortgage recession began.

And even better, the decline now is being propelled not by people leaving the job force but by the creation of new jobs, with 11,200 positions added just in July.

Look for the announcement to draw a strong reaction from both Gov. Pat Quinn and his re-election foe, Bruce Rauner. I’ll post their comments a bit later. Meanwhile, here’s the news.

The preliminary seasonally adjusted unemployment rate dropped from 7.1 percent in June to 6.8 percent in July, according to the Illinois Department of Employment Security. The state rate is still somewhat above the national figure of 6.2 percent, but the 0.6 difference is just a fraction of what it was a year ago.

Since July 2013, the Illinois rate has dropped an enormous 2.4 percentage points, from 9.2 percent to 6.8 percent, according to the federal data released by the state. That’s the biggest year-over-year decline since 1984, putting the unemployment rate just above the 6.8 percent level of August 2008.

Arguably the better news is that state employers again are adding jobs.

According to the figures, derived from a different survey than the unemployment data, the state added 11,200 private sectors in the past month, and 35,600 over the past 12 months.

The July gains were widespread across various sectors, with professional and business services up 5,900, manufacturers adding 3,900 positions and construction 1,900 slots. Leisure and hospitality dropped 3,800 in the month.

Like the unemployment data, the job figures trail national growth. But they are much, much better than a few months ago.

“The falling unemployment rate seems to be picking up momentum with the warmer weather,” IDES Director Jay Rowell said in a statement. “That is encouraging even though we know there is still room for improvement.”

Look for Mr. Quinn to emphasize the improvement, and Mr. Rauner the need for more.

Extension of Benefits for Jobless Is Set to End

November 19th, 2013

New York Times (11/17/13) Annie Lowrey

During the last week of December around 1.3 million people will lose access to additional weeks of jobless benefits. Another 850,000 will be denied benefits in the first three months of 2014.

Congressional Democrats and the White House are pushing to extend the amount of time covered by the unemployment insurance program, but the chances of an extension are small. The extended program was created in 2008 to combat the recession. Congress has extended the program multiple times since.

Full Story Available

U.S. employers add 175K jobs, rate ticks up to 7.6 percent

June 7th, 2013

June 07, 2013

(AP) — The U.S. economy added 175,000 jobs in May, a gain that shows employers are hiring at a still-modest but steady pace despite government spending cuts and higher taxes.

The unemployment rate rose to 7.6 percent from 7.5 percent in April, the Labor Department said Friday. The rate rose because more people began looking for work, a healthy sign. About three-quarters found jobs.

The government revised the job figures for the previous two months. April’s gain was lowered to 149,000 from 165,000. March’s was increased slightly to 142,000 from 138,000. The net loss was 12,000 jobs.

Stocks rose when the market opened at 8:30 a.m. Central time, an hour after the report was released. The Dow Jones industrial average surged 150 points in the first hour of trading.

“Today’s report has to be encouraging for growth in the second half of the year,” said Dan Greenhaus, an analyst at New York-based BTIG LLC.

Employers have added an average of 155,000 jobs in the past three months. But the May gain almost exactly matched the average increase of the past 12 months: 172,000.

Analysts said the less-than-robust job growth would likely lead the Federal Reserve to maintain the pace of its monthly bond purchases. The Fed has said it will keep buying bonds at the same rate until the job market improves substantially. The bond purchases have helped drive down interest rates and boost stock prices.

Stock markets have gyrated in the past two weeks on speculation that the Fed will start to taper its $85 billion a month in bond buying — a step that could raise rates and cause stock prices to fall.

“I think the Fed will stay on hold,” said Nariman Behravesh, chief economist at IHS Global Insight. “They want to see numbers above 200,000 on payroll jobs on a consistent basis before they start to taper off.”

Behravesh said he thinks the Fed will maintain its pace of bond buying through this year before scaling it back in 2014.

“Today’s report is perhaps the perfect number for nervous investors,” said James Marple, senior economist at TD Economics. “It is strong enough to point to continued economic recovery but not so strong as to bring forward expectations of Fed tapering.”

Some signs in the report suggested that the spending cuts and weaker global growth are weighing on the job market. Manufacturers cut 8,000 jobs, and the federal government shed 14,000. Both were the third straight month of cuts for those industries.

Average hourly wages ticked up just a penny in May, to $23.89. That was because much of the job growth was in lower-paying industries.

But mild inflation is boosting American’s purchasing power. Over the past 12 months, hourly wages have risen 2 percent. Inflation has increased just 1.1 percent in that time.

The economy grew at a solid annual rate of 2.4 percent in the first three months of the year. Consumer spending rose at the fastest pace in more than two years. But economists worry that the steep government spending cuts and higher Social Security taxes might be slowing growth in the April-June quarter to an annual rate of 2 percent or less.

Consumers appeared earlier this year to shrug off the tax increase. But in April, their income failed to grow, and they cut back on spending for the first time in nearly a year. A Social Security tax increase is costing a typical household that earns $50,000 about $1,000 this year. For a household with two high-earners, it’s costing up to $4,500.

Cuts in defense spending might have slowed factory output in some areas, according to a Fed report released this week. Factory activity shrank in May for the first time since November, and manufacturers barely added jobs, according to a survey by the Institute for Supply Management.

A separate ISM survey found that service companies grew at a faster pace last month but added few jobs. Service firms have been the main source of job growth in recent months.

Some positive signs of the economy’s resilience have emerged. Service companies reported an increase in new orders, the ISM found. That suggests that businesses could expand further in coming months.

And steady gains in home sales and construction are providing support for the economy even as manufacturing weakens.

Jobless Claims Fall as Labor Recovery Grinds On

March 7th, 2013

Wall Street Journal (03/07/13) Jeffrey Sparshott; Sarah Portlock

The number of U.S. workers filing new applications for unemployment benefits unexpectedly fell last week, the latest sign of a slowly improving labor market. The U.S. Department of Labor reported today that initial jobless claims decreased by 7,000 to a seasonally adjusted 340,000 in the week ended March 2. It was the third lowest number of initial claims in five years. Economists surveyed by Dow Jones Newswires had forecast 350,000 new applications for jobless benefits. The average of new claims over the past month, which smoothes out weekly volatility, fell by 7,000 to 348,750, touching its lowest level since March 2008.

U.S. Jobless Claims Rise for First Time in Three Weeks

February 21st, 2013

Bloomberg (02/21/13) Lorraine Woellert; Alex Kowalski

The number of people who applied for new unemployment benefits jumped 20,000 to 362,000 in the week ended Feb. 16, the U.S. Department of Labor reported today, keeping claims at a level that suggests slow but steady improvement in the nation’s labor market. The median forecast of 48 economists surveyed by Bloomberg called for an increase to 355,000. The number of applications in three states and the District of Columbia was estimated because of the holiday-shortened week. The average of new claims over the past month rose by 8,000 to 360,750, putting it at the highest level since the first week of the year.
 

Job Openings and Labor Turnover Changed Little in October U.S. Bureau of Labor Statistics (12/11/12)

December 12th, 2012

There were 3.7 million job openings on the last business day of October, little changed from September, the U.S. Bureau of Labor Statistics reported on Dec. 11. The hires rate (3.2%) and separations rate (3.1%) were also little changed in October.
The number of openings was little changed in all industries except construction, manufacturing, and accommodation and food services, which increased. The number of openings was also little changed in all four regions in October. The hires rate was also little changed in all industries and regions over the month. The total separations rate was little changed for total nonfarm, unchanged for total private, and rose for government. Over the 12 months ending in October, hires totaled 51.7 million and separations totaled 49.8 million, yielding a net employment gain of 1.9 million.

American Staffing Association Opposes Extending Unemployment Benefits

December 6th, 2012

ASA Opposes Expansion of Unemployment Benefits American Staffing Association (12/06/12) Toby Malara

Earlier this week, the White House and Congress made proposals on how to avoid the so-called fiscal cliff-billions of dollars in government spending cuts and the expiration of tax breaks set to take effect in January. Although both plans focus mainly on tax increases and spending cuts, the president’s proposal is also seeking $50 billion in additional stimulus spending, which includes a one-year expansion of unemployment benefits.

As negotiations continue over the next few weeks, there will be political pressure to further increase spending for regular extended unemployment compensation and for emergency unemployment compensation-despite the fact that unemployment rates are decreasing and that the account funded by employer-paid taxes to cover regular extended benefits is already $20 billion in deficit.

ASA has joined other trade associations and more than 25 state chambers of commerce in a letter reminding congressional leaders that now is not the time to increase payroll taxes paid by employers and that it is imperative that any deal that is struck between the White House and Congress not make it more costly for businesses to hire employees.

Unemployment Rate for September

November 19th, 2012

Did you know?

The unemployment rate decreased to 7.8 percent in September, and total employment rose by 873,000, following three months of little change. Total nonfarm payroll employment rose by 114,000. The big winners in job creation were healthcare, transportation and warehousing.
Courtesy of the Bureau of Labor Statistics:
http://www.bls.gov