Despite the surprising drop in the unemployment rate and strong job growth reported for February, a lot of people looking for work probably wouldn’t agree that the employment market is looking much better.
They have a point: To a large extent, the labor market improvement has to do more with companies not cutting back staff than actually stepping up their hiring.
Take the latest Bureau of Labor Statistics’ monthly survey of job openings and labor turnover. In January, the layoff rate nationwide inched down to 1.1%, falling to a level matched only one other time in the last 12 years for which the data are available.
In a separate report Tuesday, Manpower’s quarterly employment outlook showed this trend was likely to persist: Only 5% of the employers it surveyed nationwide said they anticipated staff reductions in the second quarter of this year – the smallest percentage since the third quarter of 2000.
In other words, if you’re employed today, you’re less likely to get laid off than in recent years past because many employers are operating at bare-bone levels. But that doesn’t mean companies are stepping up their hiring much.
Every month employers hire a few million people while several million workers leave their companies, some by quitting and others through layoffs and discharges. The difference in this churning is what produces net job growth or loss.
The BLS survey for January found that that the number of job openings improved modestly in January, to 3.69 million from 3.61 million in December. The hire rate held at 3.1%, not much different from previous months and still way below the almost 4% rate before the recession.
Similarly, Manpower’s survey of some 18,000 employers nationwide showed 18% of them expected to add to their workforces in the second quarter. That compared with 17% in each of the previous two quarters – hardly a change worth writing home about.
One bright spot in the BLS and Manpower surveys is that both show the construction sector is picking up, underscoring a recovering housing market that is gaining steam and could give a good boost to the economy. But on the whole, these reports suggest it might be premature to get too excited about last Friday’s jobs report, which showed the unemployment rate falling to a four-year low of 7.7% and payrolls increasing by a healthy 236,000.
No doubt, the latest monthly jobs report was welcomed and encouraging. But with many employers still content to wait and see, especially with government spending cuts under the sequestration starting to take effect, caution may be in order. As Steven Ricchiuto, chief economist at Mizuho Securities USA put it, “Let’s not get carried away with one payroll report.”
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