N ew job estimates for April and May were both revised upward in the latest report by a combined total of 29,000, making 2Q14 look even more favorable for employment growth.
Temporary Help Services Jobs Set Record for 12th Consecutive Month
June Job Growth a Pleasant Surprise
The June BLS Employment Situation was stronger than expected, showing 288,000 net new jobs and driving the unemployment rate down to 6.1%, a level last seen in September 2008. The portion of the adult population participating in the workforce remained at 62.8% for the third straight month. The robust job growth and the flat participation rate combined to reduce the number of long-term unemployed by 293,000. The most comprehensive measure of unemployment, the U-6, fell from 14.2% to 12.1% in the past year. The capital markets responded enthusiastically to the news, with the DJIA closing above 17,000 for the first time.
The average work week remained flat at 34.5 hours, while average wages rose six cents in June. Wages have increased 2% over the past year.
Widespread Job Creation
Many industry segments contributed new jobs, led by Professional & Business Services. Manufacturing was notably robust. The public sector contributed 26,000 net new jobs, compared to an aggregate loss of 34,000 jobs in government across 2013.
Involuntary Part Time Employment
In June the number of workers who accepted part time jobs because full time work was unavailable jumped by 275,000 to 7.5 million positions. This spike may be a statistical quirk, but it bears watching. With the approach of the effective date of the ACA ‘Employer Mandate’ in 2015, employers may be managing hours worked in anticipation of the 30 hours a week threshold for individual medical benefits eligibility.
Temporary Agency Employment Record Growth Streak Hits 12 Months
In the early days of the job market recovery, temp agency employment stood out as one of the few consistent sources of job growth. One hypothesis was that this feature in job creation was transitory, a reflection of employer uncertainty about the recovery; likely this view holds some truth. But now that new job creation has become broad based across many industries, it is worth noting that temp agency job growth remains vigorous. Increased reliance on contingent labor appears to have become a permanent and prominent feature of post-recession labor resourcing.
The June job report ended 2Q14 on a high note. Hiring was widespread across industries and unemployment rates declined, while pressure on wages and bill rates remained subdued. For the twelfth consecutive month temp agency employment set a new record, a strong indicator of increasing reliance on contingent labor. Trends to watch in the balance of the year include a potential tightening in the labor supply, and the effect the ACA may have on job creation and hours worked.