IT Does Its Part For U.S. Job Growth In June
July 7, 2014 Timothy Prickett Morgan
There is nothing quite like an economy to send mixed signals. The growth rate in gross domestic product was estimated to grow at an anemic one-tenth of a point in the first quarter when the Bureau of Economic Analysis put out its initial figures in April, numbers that were revised two weeks ago to a decline of 1 percent. Declines in exports and inventories accounted for most of that fall, and it is not clear yet what, if any, effect this will have on the jobs market. Thus far, this signal does not appear to have gotten through the system.
According to the latest report from the Bureau of Labor Statistics, the number of people who were officially unemployed in the United States declined and the unemployment rate has dropped to the lowest rate we have seen since the Great Recession got rolling in earnest six years ago.
The word from the economists polled by various news agencies was to expect for the US economy to create somewhere around 215,000 net new jobs in June, and as it turns out, we did a little bit better with 288,000 jobs created. This is about the pace needed to actually take a bite out of the unemployment rate, and the separate household survey that the BLS does to calculate the unemployment rate indicated that the rate fell by two-tenths of a point in June, to 6.1 percent.
No one knows for sure what the new level of structural unemployment is in the U.S. economy, by which is meant the rate below which it is not feasible to push the rate lower. There are always transitions in an economy as new products and services are fading and new products and services are created by employees are not perfectly and fluidly transferrable, so this lag always means unemployment for some. The BLS said that the number of people who were unemployed–meaning they were looking for work and could not find it–fell by 325,000 to 9.5 million. In the past twelve months, the unemployment rate has dropped by 1.4 points and 2.3 million Americans found work. The numbers for April and May were revised upwards, too, with April being pegged at 304,000 net new jobs and May at 224,00; that is 29,000 more jobs than the BLS originally thought were created.
All of this news, of course, sent the stock market flying ahead of the July 4th holiday last Friday, to a record close of 17,068.25 for the Dow Jones Industrial Average.
The biggest job gains in June were in professional and business services, retail, food services and drinking places, and healthcare. Business and professional services firms added 67,000 workers in June and have added a net 636,000 workers in the past twelve months; this is clearly one engine of the recovery. The food/drinks industry added 33,000 workers last month and have added 314,000 over the past year. Retailers took on 40,000 net new workers last month and 312,000 in the past twelve months. Healthcare is doing almost as well, with 21,000 new employees in June and 216,000 for the year. The financial sector added 17,000 workers in June, more than three times the monthly rate for the prior year and sparked by real estate, leasing, and insurance firms.
There is no tracking of jobs by type in these BLS jobs reports, but we can kind of tease out a proxy for the IT sector from various industry subsectors. Using the seasonally adjusted figures (which I am always suspicious of, but less so when the recovery is somewhat established and moreso when the economy is in freefall), companies making computer and electronic components added 1,700 workers in June, for a base of 1.06 million workers. Within this group, computer and peripheral equipment makers added 2,600 people to their payrolls (for 166,800 total), and communications equipment makers added 200 (to 98,300 total). Semiconductor and electronic component makers had 368,600 workers as June came to an end, down 100. Data processing services companies added 1,600 workers, for a pool of 270,000 employees across all suppliers, and telecommunication firms added a mere 200 workers to the pool of 850,000. Companies engaged in computer systems design and related services added 6,900 workers in June, and there is a whopping pool of 1.77 million workers.