Why so few new jobs in May?
That raspy noise? It's the sound of the nation's economists, pundits, and prognosticators scratching their heads, trying to figure out how the nation's economy could have produced so few jobs in the month of May.
That raspy noise?
It's the sound of the nation's economists, pundits, and prognosticators scratching their heads, trying to figure out how the nation's economy could have produced so few jobs in the month of May.
Yes, the economy has been slowing, dealing with fallout from lower oil prices, China's stall, and problems in Europe. Payrolls that had grown by an average of 230,000 a month are now expanding more slowly, by an average of 116,000.
Even so, the total of 38,000 jobs created in May was way lower than anyone expected - and it's not what some business leaders are seeing in their payrolls.
The only easy explanation, and it doesn't explain everything, is the Verizon strike, which stripped 37,000 workers from the labor market in mid-May, when the U.S. Labor Department conducts its surveys.
Health care added jobs, but there were big drops in mining, manufacturing, construction, hospitality, wholesale trade, and temporary staffing.
"I didn't expect this big a surprise," Bucks County-based economist Joel Naroff wrote.
Maybe the Federal Reserve can figure it out. It will soon decide if Friday's perplexing report causes a delay in raising short-term interest rates.
The unemployment rate fell to 4.7 percent, the lowest rate since November 2007. But that isn't as positive as it sounds, as it reflects that about a half-million people no longer count as unemployed because they aren't looking for work.
David Donald, CRO of PeopleShare, a regional staffing agency based in Philadelphia, was also mystified.
Nationally, jobs in staffing and temporary help fell by 21,000, seasonally adjusted. But Donald, whose firm has over 10,000 temporary staffers on his payroll, said he had many open job orders, a sign that employment is up.
"Staffing companies have been regarded as one of the leading indicators heading into a bad economy," he said. Temporary employment in the past has declined ahead of bad times, as firms cut temps to save jobs for employees.
"But we're not seeing those warning signs," he said. "Demand is as high as it has ever been."
Construction economist Bernard Markstein of Markstein Advisors, which advises Associated Builders & Contractors Inc., a trade group, looked to the weather map to see why 15,000 jobs were lost in construction. Floods in Texas and bad weather in the Midwest, Markstein indicated.
If there's anything linking the job situation, it's energy and manufacturing, two sectors often in tandem. "The manufacturing slowdown is real and it's in direct response to what we see going on with the global slowdown," said Bill Spriggs, the AFL-CIO's chief economist.
The stresses are real for two Bucks County manufacturers.
"We work with some companies that are directly tied to the cost of oil and they are down," said Tom Krol, president of IMET Corp., a custom manufacturing plant in Southampton.
One IMET customer had planned to order 2,000 electronic control boards that regulate the oil temperature in the shipment process. Instead, it ordered 20.
"Our increase is in the lighting market," said Krol. Imet's client diversity means he can add jobs and avoid layoffs.
In January 2015, employees at Waste Gas Fabricating Co. in Fairless Hills could get all the overtime they wanted. Now it's been cut by two-thirds, averaging about five hours a week, but no layoffs are in the offing, said Kyle Cloman, chief executive.
Revenues are 60 percent of what they were then, and Cloman said he's hustling to keep the firm busy with enough assignments from smaller clients.
For example, Waste Gas isn't making many steel enclosures for oil pumping equipment these days, due to the low price of oil.
The fall in manufacturing may also help explain the drop in construction, with the biggest job losses in heavy and civil construction and non-residential building, Markstein said.
With all that, the question remains: Is this an aberration or a slowdown? "I am leaning toward aberration, since consumers are still buying homes, motor vehicles, and just about everything," Naroff said
Richard Wahlquist, president of the American Staffing Association, also saw it as an anomaly, and perhaps a statistical malfunction.
"Our members have been reporting a slowdown," not a decline, he said, and described a conversation with the CEO of one of the nation's largest staffing firms: "He said he had his best week" in May.
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