Job Market Continues to Reflect Near-Zero-Sum Game

By Theresa Minton-Eversole Jul 12, 2013

Two new employment reports show that hiring continues in the U.S., but the rate of separations is keeping pace, resulting in meager net employment gains during the past 12 months. There were 3.8 million job openings on the last business day of May, according to the Job Openings and Labor Turnover Survey (JOLTS) released July 9, 2013, by the U.S. Bureau of Labor Statistics (BLS), which noted there was little change from April. The May hires and separations rates—3.3 percent and 3.2 percent, respectively—also stayed about the same as those in April. Over the 12 months ending in May 2013, hires totaled 51.9 million and separations totaled 50.1 million, yielding a net employment gain of 1.8 million.

The number of job openings in May was about the same in April in most industries but rose in retail trade and fell in professional and business services, according to the BLS. May vacancies (not seasonally adjusted) did not change significantly over the 12-month period for total nonfarm, total private and government sectors. Several industries had an increase in jobs over that period, including retail trade; transportation, warehousing and utilities, and finance and insurance. However, the durable goods manufacturing and professional and business services industries had fewer openings over the 12-month period.

The BLS reported there were 4.4 million hires in May, noting this was also similar to April in all industries and U.S. regions. In addition, for most industries the number of hires remained about the same over the year.

Hiring Nearly Equal to Separations

The situation is similar with regard to separations, which include quits, layoffs, discharges and other separations, such as retirements, death and disability, the BLS explains. There were 4.3 million total separations in May, essentially the same number as in April.

The layoffs and discharges level (not seasonally adjusted) was little changed over the 12 months ending in May for total nonfarm and total private sectors. But the number of layoffs and discharges fell in professional and business services, educational services, and state and local government during the same period.

The Conference Board Employment Trends Index (ETI) edged up in June and is 3.8 percent higher this June compared with June 2012, the organization reported on July 9. The eight labor-market indicators aggregated into the ETI are as follows:

  • Initial Claims for Unemployment Insurance, reported by the U.S. Department of Labor.
  • Job openings (BLS).
  • Number of employees hired by the temporary-help industry (BLS).
  • Ratio of involuntarily part-time to all part-time workers (BLS).
  • Percentage of respondents who report in The Conference Board Consumer Confidence Survey that they find “jobs hard to get.”
  • Percentage of firms with “Positions Not Able to Fill Right Now,” as reported by the National Federation of Independent Business Research Foundation.
  • Industrial production, as reported by the Federal Reserve Board.
  • Real manufacturing and trade sales, as reported by the U.S. Bureau of Economic Analysis.

June’s improvement in the ETI was driven by positive contributions from four of its eight components: industrial production, initial claims for unemployment insurance, number of temporary employees, and real manufacturing and trade sales.

While this is positive news, there’s still skepticism over whether the job market will expand in the coming months.

“In the second quarter of 2013 the Employment Trends Index grew more slowly than in the previous two quarters,” said Gad Levanon, director of macroeconomic research at The Conference Board, in a press statement. “Even though employment has been growing faster than expected in recent months, the current slowing of the ETI suggests that acceleration in employment growth is unlikely in the near future.”

Job Cutting Continues

According to data reported July 7 by global outplacement firm Challenger, Gray & Christmas, job cuts may continue to be a drag on the country’s near-term employment outlook.

The slowdown in job cuts last quarter was responsible for an overall decline in job cuts through the first half of 2013, according to Challenger, which reports that the six-month total is the second lowest since 2000. Although job cuts have decreased overall, four of the five industries with the heaviest layoffs so far this year have seen them increase by an average of 60 percent.

Of the top five job-cutting sectors, financial services has experienced the heaviest downsizing and the largest year-over-year gain, with job cuts in this sector up 82 percent. Downsizing in the retail sector has climbed 38 percent from 2012. Meanwhile, job cuts in the health care sector have risen 62 percent. June job cuts also surged in the computer and education sectors.

“The economy is picking up speed, with housing and manufacturing staging comebacks,” said John A. Challenger, chief executive officer of Challenger, Gray & Christmas, in a July 3 press statement. “Threats to job security still exist, however, in the form of federal spending cutbacks stemming from sequestration as well as potential fallout from implementation of health care reform.”

Nevertheless, “Even if we see an increase in job cuts related to sequestration and health care reform,” Challenger said, “it is unlikely that the overall pace of downsizing will see a significant surge in the second half of the year. …Unless there is a major shock to the economy in the second half of 2013, we could see layoff activity continue to decline toward pre-2000 levels.”

Theresa Minton-Eversoleis an online editor/manager for SHRM.

Related Articles:

What’s in Store for Job Market in Second Half of 2013?, SHRM Online Staffing Management, July 2013

Slow Job Creation Could Become Postrecession Norm, SHRM Online Staffing Management, July 2013

Hiring Rate Will Hit Three-Year High in Manufacturing, Services, SHRM Online Staffing Management, July 2013

Job Cuts Down 11% from 2012, SHRM Online Staffing Management, June 2013

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