Unemployment rate inches up in the US
IT sector hangs out Help Wanted sign
Economists were not expecting for the US economy to create a lot of jobs in June, but they did reckon north of 100,000 workers, net of layoffs, would be added to the labor pool last month. They guessed wrong. According to the Bureau of Labor Statistics, the US economy only added 18,000 jobs, less than one-tenth the amount needed to just keep up with population growth and the lowest number of jobs added to the economy in the past nine months.
The unemployment rate, which is calculated separately, rose by a tenth of a point to 9.2 per cent, and there are 14.1 million people who can't find work in the United States. It would take somewhere on the order of 4 per cent GDP growth for a year to knock one point off the unemployment rate, and the consensus is that GDP might grow at 3 per cent this year. So this morning the Obama administration is scrambling to do damage control while it is in the midst of stalled budget negotiations.
If you are a Keynesian, you can blame governments in two ways for the unemployment rate: first, for not doing enough to help bolster employment and second, for slashing their own payrolls. The BLS, which is a part of the Department of Labor, revised the number of layoffs done by local and state governments in May, with cuts deeper than modeled, and added in its June 2011 jobs report (PDF) that on a seasonally adjusted basis, federal, state, and local governments shed 39,000 workers in June, and revised the number from May up to 48,000 lost jobs instead of the 39,000 originally reported a month ago.
The other interesting bit is that the BLS has this year updated the algorithms that move from the raw jobs data to the seasonally adjusted data have been changed for the first time since 1943, and those adjustments are having a downward impact on the monthly figures in 2011.
As it often does, the BLS went back over the prior two months' data and decided it was too optimistic about the number of jobs created and now says that only 25,000 net new jobs were created in May and only 217,000 in April. That's 44,000 fewer jobs than the prior reports had estimated.
Another alarming statistic is that workers are getting fewer hours on the job, and hence less money. The average workweek declined by a tenth of an hour, and according to economists, across 130 million workers that is the equivalent to the economy losing several hundred thousand jobs in terms of lost current and future spending. That said, most people would agree that working fewer hours a week is better than losing a job entirely.
If there is any good news, it is that the private sector is continuing to add jobs. In June, the BLS reckons that non-farm, non-government employers – who comprise about three-quarters of the economy in terms of the number of workers – added 57,000 jobs. (Farms are carved out separately because of the seasonal and regional nature of the work they do.) The BLS now says that the private sector only added 73,000 jobs in May, down from its original 83,000 estimate.
In June, manufacturers only added 6,000 net new workers and have been, as a group, unenthusiastic about hiring for the past two months. Construction employment cratered in 2007 through 2009 and has been more or less flat since then. Healthcare companies added 14,000 workers in June, and professional and technical services firms added 24,000 employees. Mining is doing relatively well, with 8,000 workers added to the payroll in June, and companies engaged in the leisure and hospitality sector added 34,000 people.
As El Reg has pointed out before, the BLS doesn't track employment by job type, but rather by industry, and that means you can't get a sense of how the jobs situation is within the IT departments across the country. But you can get a feel for how IT vendors are doing, and that is an indirect indicator of sorts.
Computer and electronic products manufacturers added 8,700 jobs in June (using the raw data, which at this point may be more trustworthy), to total 1.13 million workers in the sector. Within this sub-sector of the manufacturing industry, computer and peripheral equipment makers have 172,200 workers, up 2,300 from May. Communication equipment makers added 1,200 workers, to total 119,100 employees in the sector. Semiconductor and electronic component makers employed 386,300 people in June, up 3,500.
The BLS plunks book, film, and other kinds of publishing as well as broadcasting, telecommunications, and data processing services into what it calls the information sector, which employs slightly under 2.7 million workers. Within this sector, the data processing and hosting sector actually cut 900 jobs, to total 241,900, in June, while telecommunications companies added a mere 400 workers, to make 866,600.
In the professional and business services sector, which is one of the dominant parts of the US economy with 17.3 million employees, the IT portions did relatively well in June. Companies engaged in computer systems design and related services added 7,500 workers in June, to just over 1.5 million workers, and added 7,400 in May. That number was revised upwards for last month, with the BLS originally saying that only 6,000 computer designers were being added in May. Management and technical consulting services firms, which generally have ties to IT projects, added 9,100 jobs to total 1.04 million workers. Since March, these management and tech consulting firms have added 52,000 workers. ®
Sponsored: Today’s most dangerous security threats