Employment progress is prone to look stronger within the June report as companies scramble to search out workforce
A sign reading “Hiring All Positions” will be displayed at a pastry shop on June 23, 2021 in Los Angeles, California.
Mario Tama | Getty Images
Job growth in June is expected to surpass May and more Americans to return to the workforce, although companies continued to struggle to find people to hire.
Economists expect the number of non-farm workers to have increased by 706,000 jobs in June and the unemployment rate to have fallen from 5.8% to 5.6%, according to the Dow Jones. In comparison, 559,000 jobs were created in May. Average hourly wages are said to have increased 0.3% in June compared to May and 3.6% year-on-year, after a 1.98% increase in May.
“I think June is the last month that the numbers go through the [labor] Supply problem, “said Stephen Stanley, chief economist at Amherst Pierpoint.” The supply problems will not go away, but they will do. “
Attitude wasn’t nearly as robust as economists expected, and Stanley said there are several factors behind the labor shortage. For one thing, some workers remain concerned about the virus and are not yet comfortable at work as vaccines continue to be introduced. Others are likely to wait until September when the children go back to school before going back to work.
However, Stanley also said the federal government’s increased $ 300 weekly unemployment benefit was a factor, although some states are cutting the additional payments, which expire for everyone in September.
There are some encouraging signs, such as far fewer initial jobless claims, which dropped to 364,000 last week, the lowest since March 2020.
“I think there will be room for much bigger increases, not just in restaurants but across the board, and people will return to the job market in greater numbers,” Stanley said. “I think the monthly gains will pick up from here. … All point to September as the big month, and I think that’s right, mainly because of the declining schools. “
Stanley said the June employment report through the end of the school year when workers are on leave has historically been negatively impacted. However, with many schools not fully open this year and with no major layoffs, this seasonal factor can turn out to be a positive.
Recruitment surge in summer
“My guess is we could actually see nearly 1 million a month in July and August and then go up to well over 1 million in September with the educational pop,” Stanley said. “If that happens, that’s another 4 million between June and September [jobs]. You’re not getting to the February 2020 level, but you’re getting a lot closer. “
Citigroup economists expect 860,000 jobs to be created in June. They said if the attitudes were stronger it could affect Federal Reserve expectations.
“Fed officials have recently focused more on the background of strong labor demand and have been slightly less concerned about weaker-than-expected employment values due to labor shortages,” noted Citi economists. “This suggests to us that the bigger market reaction in the event of an upside surprise” would be more than a million.
Citi economists said if June’s report is strong, it could be that the more resilient labor market the Fed expects this fall could have appeared earlier. Markets could be more responsive if the data turns out stronger than expected, as it could trigger an earlier than expected move by the Fed to slow its bond purchases or its quantitative easing program.
“A stronger employment report for June would help solidify expectations for a reduction in the announcement at one of the next FOMC meetings,” noted Citi economists. The beginning of the slow phasing out of QE purchases of at least $ 120 billion per month would be a signal that the Fed’s next move could be to hike rates once the bond program ends.
June ‘double-digit’ better than May
Tom Gimbel, founder and CEO of LaSalle Network, said what he sees in his nationwide recruiting and recruiting business suggests June was a strong month for job growth and the upward trend appears to be continuing.
“What we saw in June is that historically there is usually a summer delay, but we didn’t see that this June,” he said. “We saw continued upward growth. It was double digits which May was.”
Gimbel said he is also seeing a very rapid conversion rate among workers who are temporarily moving into permanent status. “This is happening at a 50% higher rate than before Covid. That happens in the areas of accounting, administration, office and human resources, ”he said.
Gimbel’s business is primarily focused on white-collar jobs, and he sees interest from companies across a wide range of industries. “First and foremost, service companies are still leading the way, but we’re also seeing so much manufacturing,” he said.
The type of vacancies to be filled is also a good sign of future labor market strength. “Accounting is one of our greatest business practices. That goes for accountants and financial analysts, ”said Gimbel. “What we are seeing is that companies are investing in back office infrastructure versus sales and IT, which means companies are preparing for large-scale expansion.”
In April’s latest Labor Department job openings report, vacancies rose to a record 9.3 million as the economy recovered from the worst of the pandemic. In the leisure and hospitality industry, the sector hardest hit by the pandemic, job availability increased by 32.7%.
In May, leisure and hospitality employment was still down 2.5 million, or 15%, from February 2020. This area is expected to have many attitudes.