U.S. jobless rate climbs to 4% as labor market tightens

by Talk Business & Politics staff ([email protected]) 209 views 

The U.S. economy continued to see strong job growth in June, but private sector employers are increasingly worried about labor shortages as several fast-growing industries are having more difficulty finding workers to fill key positions, according to new data released Friday (July 6) by the U.S. Bureau of Labor Statistics (BLS).

After touching a 20-year low of 3.8% in May, the nation’s rose to 4% in June and the number of unemployed persons increased by 499,000 to 6.6 million. A year earlier, the jobless rate was 4.3% and the number of unemployed persons held at 7 million.

Total U.S. nonfarm payroll employment increased by 213,000 in June as job growth occurred in professional and business services, manufacturing and health care sectors. In Arkansas, key blue-collar manufacturers in the steel, nondurable goods and industrial trades have announced major job this summer.

Last month, BLS officials reported the nation’s jobless fell below 4% for the first time since President Bill Clinton was in office as the Arkansas and U.S. unemployment rates mirrored each other at 3.8%. Despite the upbeat job market assessment, employers are expressing concerns about the tightening labor pool as the U.S. job market moves toward full employment. In the monthly ADP National Employment Report on Thursday, Moody’s chief economic Mark Zandi noted that business owners are posting “help wanted” signs but getting fewer applicants.

“Business’ number one problem is finding qualified workers. At the current pace of job growth, if sustained, this problem is set to get much worse. These labor shortages will only intensify across all industries and company sizes,” said Zandi.

The CBIZ Small Business Employment Index (SBEI), which tracks hiring trends among thousands of companies that employ 300 or fewer employees across the U.S., also reported continued growth in headcounts among “Main Street” employers. However, as trade concerns continue to escalate, some employers expect to see a “trickle down” impact to small business owners and their hiring decisions over time.

“So far this summer, we’ve experienced two periods of substantial hiring increases, which likely signifies a growing trend in small business hiring,” said Philip Noftsinger, executive vice president of CBIZ Employee Benefits. “With a tightening labor market, it’s possible that we could see hiring slow over the next few months, but whether or not that occurs really is dependent upon how much slack remains in the labor market.”

Among the major worker groups, the unemployment rates for adult men and women (3.7%) and Asians (3.2%) increased in June. The jobless rate for teenagers (12.6%, Whites (3.5%) and Hispanics (4.6%) showed little or no change over the month. The jobless rate for blacks, which has been opened touted by the Trump administration, rose by 0.7 percentage point to 6.5%.

Among the unemployed, the number of job losers and persons who completed temporary jobs increased by 211,000 in June to 3.1 million, and the number of reentrants to the labor force rose by 204,000 to 2.1 million. The number of long-term unemployed, or those jobless for 27 weeks or more, increased by 289,000 to 1.5 million in June. The labor force participation rate grew from 62.7% to 62.9% and the employment-population ratio was flat at 60.4%.

The number of persons employed part time for economic reasons was little changed in June at 4.7 million. These individuals, who would have preferred full-time employment, were working part time because their hours had been reduced or they were unable to find full-time jobs.

There were 1.4 million persons were marginally attached to the labor force, little different from a year earlier. These individuals were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months. They were not counted as unemployed because they had not searched for work in the four weeks preceding the survey.

There were 359,000 discouraged workers in June, down by 155,000 from a year earlier. Discouraged workers are persons not currently looking for work because they believe no jobs are available for them. The remaining 1.1 million persons marginally attached to the labor force in June had not searched for work for reasons such as school attendance or family responsibilities.

Among the 213,000 job additions in June, employment in professional and business services increased by 50,000 in June and has risen by 521,000 over the year. Manufacturing added 36,000 jobs in June as durable goods manufacturing accounted for nearly all the increase. Employment in health care rose by 25,000 in June and has increased by 309,000 over the year.

Construction and mining employment also trended upward in June, but the retail trade lost 22,000 jobs as brick-and-mortar vendors struggle to keep pace with online competitors. Employment showed little or no change over the month in other major industries, including wholesale trade, transportation and warehousing, information, financial activities, leisure and hospitality, and government.

The average workweek for all employees on private nonfarm payrolls was unchanged at 34.5 hours in June. In manufacturing, the workweek edged up by 0.1 hour to 40.9 hours; overtime edged down by 0.1 hour to 3.5 hours.

Average hourly earnings for all employees on private nonfarm payrolls rose by five cents to $26.98. Over the year, average hourly earnings have increased by 72 cents, or 2.7%. Average hourly earnings for private-sector production and nonsupervisory employees increased by four cents to $22.59 between months.

The change in total nonfarm payroll employment for April was revised up from 159,000 to 175,000, and the change for May was revised up from 223,000 to 244,000. With these revisions, employment gains in April and May combined were 37,000 more than previously reported.