Fed: Economy Generally Expanded; Staffing Steady but With Shortages of Skilled Workers
American Staffing Association
Overall economic activity expanded from early April to late May, according to the Federal Reserve Board’s latest report on regional economies (known as the “beige book”). Employment levels were up slightly over the reporting period, with some reports of layoffs. Demand for nonfinancial services increased. Staffing firms generally reported a steady demand for services but difficulty attracting qualified candidates. Shortages of skilled workers created wage pressure. Outlooks among respondents were generally optimistic, with growth expected to continue at a modest to moderate pace in several districts.
U.S. Productivity Falls 3.1% in First Quarter
Wall Street Journal
(06/04/15) Jeffrey Sparshott; Josh Mitchell
Worker productivity declined at a 3.1% seasonally adjusted annual rate in the first quarter, according to the U.S. Department of Labor. Economists polled by the Wall Street Journal
had forecast a 3.0% decline from the fourth quarter of 2014.
Meanwhile, unit labor costs rose at a 6.7% annual rate. Economists had forecast a 6.0% increase.
Productivity data can be volatile from quarter to quarter and often are substantially changed. Despite the data shortcomings, overall trends have been lackluster, falling for two consecutive quarters, the first time that has happened since 2006.
Jobless Claims Dropped to 276,000 Last Week
The number of people applying for unemployment benefits in the week ended May 30 declined by 8,000 to 276,000, according to the U.S. Department of Labor, indicating that the job market is stable even after growth sharply declined at the beginning of the year. Fifty-two economists surveyed by Bloomberg had forecast claims of 278,000. The four-week moving average of new claims increased by 2,750 to 274,750.
America Searches for Its Pay Raise
Wall Street Journal
(06/03/15) Ben Leubsdorf; Jon Hilsenrath
With the unemployment rate decreasing to precrisis levels across the country, more American workers are wondering why their wages are not increasing—and economists and policy makers at the U.S. Federal Reserve also are questioning the slow pace of wage growth. When unemployment rates decline, wages generally increase as demand for workers rises, but an analysis of U.S. Department of Labor data by the Wall Street Journal
shows that 67% of 33 U.S. metro areas where unemployment rates and nonfarm payrolls returned to prerecession levels last year recorded slower wage growth than the prerecession pace.
This is because of such factors as overseas competition, hidden slack in the economy, lingering psychological impacts of the recession, and scant growth in productivity. DOL says wages and salaries posted a year-to-year increase of 2.6% in the first quarter, the biggest gain since 2008, but John Williams, president of the Federal Reserve Bank of San Francisco, notes that even at full employment, yearly wage increases of 4% or more that were common before the recession would be replaced by increases of 3% to 3.5%.
ISM Service-Sector Index Eases in May
Wall Street Journal
(06/03/15) Kathleen Madigan
The Institute for Supply Management’s nonmanufacturing purchasing managers index hit a 12-month low of 55.7 in May, down from 57.8 in April, likely due to weakness in the mining sector. Mining accounts for 2.79% of its survey, and it was the only sector to report a contraction and declines in production, new orders, and employment last month. Forecasters polled by the Wall Street Journal
had anticipated that May’s PMI would be little changed at 57.1. Readings above 50 signal expansion.
ISM’s employment index dropped slightly from 56.7 in April to 55.3 in May, with respondents reporting a shortage of service workers for the fourth straight month. Meanwhile, data provider Markit’s service-sector component fell from 57.4 in April to 56.2 in May, but its employment index shows that hiring occurred at the strongest pace since July 2014.
Oil-Related Job Cuts Ebb as Employers Cut 41,034 Jobs Overall
Challenger, Gray & Christmas Inc. News Release
After reaching a three year high in April, planned job cuts announced by U.S.-based firms declined sharply in May, falling by 33% to 41,034, according to Challenger, Gray & Christmas Inc. Some 61,582 planned job cuts were announced in April. That was the highest monthly total since 61,887 layoffs were recorded in May 2012. To date, employers have announced 242,830 cuts in 2015, 13% more than the 214,600 announced in the first five months of 2014.
Job cut announcements related to falling oil prices appear to be ebbing. In May, just over 1,000 planned layoffs were attributed to the drop in oil. In contrast, April saw 20,675 job cuts blamed on oil prices. “Unless there is another severe drop in the price of oil, we probably will not see another surge in oil-related job cuts this year,” says John A. Challenger, chief executive officer of Challenger, Gray & Christmas.
Free ASA State of the Industry Webinar This Month
ASA and Inavero, the association’s satisfaction survey partner, will present the second ASA State of the Industry webinar
of 2015 Tuesday, June 23, 3–4 p.m. Eastern time.
Get an exclusive first look at the results of a new ASA survey on workforce trends, as well as an update on staffing industry employment and sales. Hear from ASA general counsel Stephen Dwyer, who will talk about federal and state legislation that may affect your business. Plus, get current industry insights from Peter Dameris, president and chief executive officer of On Assignment Inc., who will participate in a question-and-answer segment.
This webinar is free for nonmembers and qualifies for continuing education hours toward ASA certification renewal.