The employment report issued Friday, while suggesting some improvement in the nation’s labor markets, left a lot of questions unanswered about when companies may be willing to start aggressively hiring.
On the surface the news was good. The Department of Labor said U.S. payrolls rose by 195,000 in June, and revised the April and May reports to show an additional 70,000 than had previously been reported.
However, the gains were not enough to budge the unemployment rate of 7.6 percent. In addition, the so-called U6 segment of the report measuring the rate of workers with part-time jobs but looking for full-time employment rose from 13.8 percent in May to 14.3 percent last month.
As might be expected, opinions varied on the news.
“The job market continues to gracefully navigate through the strongly blowing fiscal headwinds,” said Mark Zandi, chief economist at Moody’s Analytics. “Health care reform does not appear to be significantly hampering job growth, at least not so far. Job gains are broad-based across industries and businesses of all sizes.”
A survey by Moody’s and ADP of employment trends and the June reading, released Wednesday, was similar to the DOL report, with civilian payrolls increasing by 188,000. Most of those jobs, 149,000, were from small and medium-sized businesses.
Despite the ADP report, the National Federation of Independent Businesses said the uncertainty about health care reform and other battles in the nation’s Capitol are keeping small businesses from moving forward.
“Small employers are still trying to figure out what labor will cost and what firm size will have to comply with which rules. As long as Washington continues to create rolling disasters — exemptions, special deals, delays, confusion, contradictory regulations — small businesses will not be ready to bet on their futures by hiring lots of workers with uncertain costs,” said William Dunkelberg, chief economist with the NFIB.
The local labor market, compared to the national and California employment trends, seems to be much more indicative of a rebounding economy.
Alan Gin, a professor at the University of San Diego and the author of the monthly index of leading economic indicators for San Diego County, said the most recent report showed, “the firing front was more positive, with the local unemployment rate decreased to 6.7 percent in May, the first time it has dropped below 7.0 percent since November 2008. That compares to 8.8 percent in May 2012.”
The recent reports show jobs growth, while tepid, is at least not declining. Another report issued last week by consulting firm Challenger, Gray & Christmas, said layoff announcements by U.S. companies declined by 9 percent in the first half of 2013. The 258,932 pending job cuts in the past six months were the second lowest since 2000.
“Even if we see an increase in job cuts relating to sequestration and health care reform, it is unlikely that the overall pace of downsizing will see a significant surge in the second half of the year. In fact, health care reform may be just as likely to contribute to hiring as it is to job cuts,” said CEO John Challenger.
"One Iowa-based call center recently announced plans to expand its staff by 120 workers after winning the contract to provide customer support services for the Affordable Care Act.”