The U.S. economy is still creating jobs at a healthy rate. During the month of June the U.S. economy created 222,000 and year to date, (YTD), it has created an average of 179,800 jobs per month. The total number of seasonally adjusted (SA), non-farm people employed in the US in June 2017 was 147,388,000. This figure increased by 2,206,000 or 1.52% year on year.
Figure 1 shows the history of the total number of US workers employed in red on the left axis and the monthly change in blue on the right axis. Employment level reached a low point of 127.82 million (M), in January 2010. Since that time the economy has created 19.6M jobs to reach the current record high level of 147.39 M.
Job creation figures for the past two months were revised upwards by a total of 47,000, meaning that employers added on average 194,000 each month. This is roughly twice what is needed to keep pace with the population reaching working age. The unemployment rate edged higher to 4.4% as more workers entered the labor force. Wage growth remains modest, rising a fraction, 0.2%, during the month 2.5% on an annual basis. The private sector added 187,000, up 28,000 higher than in May. Strong growth in construction was the main driver. Manufacturing managed a small gain despite the declining motor vehicles sales and slower nondurable goods sales.
The labor force participation remains low at 62.8%, where it has languished for 47 months, (+ or – 0.5). Keep in mind that a structural change involving retiring baby boomers, a decline in the number of working women and more people deciding to attend college have combined to reduce the number of people seeking work. Figure 2 present a chart on the employment to population ratio, (Labor Force Employed of working age/Total Population). This ratio plunged from the 62 to 63 range prior the recession to the 58 to 59 level in the 2010 to 2014 timeframe. It has been steadily climbing since then reaching an average of 60.1 YTD 2017. The ratio is improving but remains well below the pre-recession level.
In its July 11th news release the Bureau of Labor Statistics Job Openings and Labor Turnover (JOLT), reported that there were 5.7M job openings in May, down from a record high of 6M in April. In percentage terms this equates to 3.7% a drop of 0.2 percentage point month on month. Hiring’s increased from 5.0M to 5.5M, while separations rose from 5M to 5.3M. The increase for both hiring’s and separations is evidence that workers have little fear to change jobs.
The economic expansion is well into its eighth year and the labor market continues to exhibit strength. Companies are continuing to expand with a high degree of confidence as evidenced by ongoing strong job creation.
At Gerdau, we keep a keen eye on the employment numbers, especially manufacturing and construction since this is where most long product steel ends-up. In addition we know that growth in net job creation correlates to increased steel consumption.