A Mixed Bag For IT In The Latest Jobs Report
April 7, 2014 Timothy Prickett Morgan
The economy in the United States is plugging along but not really zooming ahead if job creation is any measure of a real recovery. In March, the Bureau of Labor Statistics, the part of the Department of Labor that tracks employment statistics and comes up with the official unemployment rate, reckons that the economy added 192,000 net new workers. That is just shy of the 200,000 to 250,000 workers that the economy has to create to keep up with population growth.
According to the latest report from the BLS, the number of people who were unemployed in the United States, the net change in employment for local, state, and Federal government agencies was zero, the first time in a while that the pink slips took a bite out of the aggregate government workforce.
As you can see from the chart above, job creation was weak in December and January, but picked back up in February and March, which is good news. In fact, the BLS says it now believes that job creation was a bit stronger than it originally forecast in both January and February. Figures for January were revised upward by 15,000 to 144,000 and figures for February were boosted by 22,000 to 197,000. Averaged over the prior 12 months, the economy has added 183,000 net new jobs per month, and that is with an average of around 7,100 workers being cut from the Federal government. The services sector added 57,000 workers, the healthcare sector added 19,000 workers, the food services sector added 30,000 workers, mining and logging companies added 7,000 workers, and construction companies added 19,000 workers.
The unemployment rate has come down over the past several years, as you can see below, but it is now wiggling just above the 6.5 percent rate that Ben Bernanke, the former chairman of the Federal Reserve Board, said would be a level at which he would cut back on stimulus injection of capital into the economy.
Janet Yellen is now chair of the Federal Reserve, and she indicated in late March that the Fed was not just looking at the official unemployment rate as an indicator of when to take the foot off the stimulus gas. To make it simple, Bernanke essentially said that 6.5 percent was the new rate of structural unemployment in the economy, and a figure we should get used to, rather than the 4.5 percent rate that prevailed in the early 2000s that was thought to be a baseline from which it was impractical to try to drive lower than. Yellen seems to be saying maybe we can do better than that and get more people back to work. It all depends on what happens to the inflation rate, which the Fed likes to keep around 2 percent on an annualized basis to avoid deflation, which is worse than anything.
The BLS doesn’t track employment by job title each quarter, but we can rip out a proxy of sorts from the data to see how the IT sector compares to the labor pool at large. In manufacturing, computer and electronic product makers shed 400 workers, and had a labor pool of just under 1.06 million people. Computer and equipment peripheral makers had 163,000 workers and added 800 in March, while semiconductor makers shed 2,100 jobs and ended the month with 368,400 employees. Communications equipment makers had 99,700 workers, up 300 from February. In the information sector, the data processing and hosting industry shed 900 workers, to a pool of 267,700 people, while telecommunications companies added 2,200 workers to a labor force of 855,100. Companies engaged in computer systems design added 6,100 workers and employ 1.74 million people; management and technical consulting companies added 3,500 people in March, and ended the month with 1.21 million people.
So, IT services seems to be doing well while IT product manufacturing and hosting is down a bit.