Popular Economics Weekly
Why start with motor vehicle sales, I said yesterday? Because jobs are created these days only when consumers buy more, and they will only grow their purchases when incomes are rising.
So the good news in Friday’s BLS employment report is that wages and salaries are finally ticking up, in spite of corporation efforts to offshore even skilled work with the so-called H-1B visa program that allows corporations to bring in cheaper paid foreign workers that are now replacing American workers.
The U.S. pumped out a robust 280,000 jobs in May, showing that companies are still on the prowl for new workers despite what appears to have been a temporary slowdown in economic growth earlier this year.
The increase in hiring — the biggest since December — was widespread and suggests the economy has regained momentum. High-tech firms, health-care providers, hotels, home builders and retailers all added workers.
And the Index of Small Business Optimism increased 1.4 points to 98.3, another sign of increased hiring, since small businesses create some two-thirds of new jobs. May is the best reading since the 100.4 December reading but nothing to write home about, said the NFIB. The 42 year average is 98.0. Eight of the 10 Index components posted improvements.
So small businesses posted another decent month of job creation in May, a string of 5 solid months of job creation. On balance, owners added a net 0.13 workers per firm over the past few months…. Twenty-nine percent of all owners reported job openings they could not fill in the current period, up 2 points, revisiting the February reading, and the highest reading since April 2006.
What will increase GDP growth, and even more jobs, is that exports were up 6.5 points to 55.0 in a reading that highlights yesterday’s big service-sector surplus in the April trade report. Second-quarter GDP looks to be getting a lift by a decline in imports, which are a negative number in the GDP report since they are subtracted from exports. Exports are a positive measure that indicates how much is domestically produced. Imports fell 3.3 percent in April to $230.8 billion at the same time that exports were up 1.0 percent to $189.9 billion.
Note there was special strength for arts/entertainment/recreation and management & support services in the ISM report said Econoday, the latter one of the strongest export industries for the nation. And, both real estate and construction show strength. The only one of 18 industries to contract in the month was, once again, mining which is being hurt by low commodity prices (meaning cheaper gas and oil).
Another indicator of improved hiring was in the government sector, often overlooked. Gallup’s U.S. Job Creation Index reached a new high of plus 32 in May, up from plus 31 in April. And “perceived” job creation in the government sector was at a new high, when government job creation has been the lagging indicator holding back overall employment. Within the government sector, the Job Creation Index score reached plus 25 in May. This is up from plus 22 in April and the previous high of plus 23 in August 2014.
This is extremely important, because the Obama administration has the worst record in recent history of government job creation, and the loss of some 800,000 government jobs is the major reason employment has grown so slowly post-Great Recession (though Obama is now second-best in overall private sector job creation, according to Calculated Risk).
The public sector grew during Mr. Carter’s term (up 1,304,000), during Mr. Reagan’s terms (up 1,414,000), during Mr. G.H.W. Bush’s term (up 1,127,000), during Mr. Clinton’s terms (up 1,934,000), and during Mr. G.W. Bush’s terms (up 1,744,000 jobs).
However the public sector has declined significantly since Mr. Obama took office (down 688,000 jobs). These job losses have mostly been at the state and local level, but more recently at the Federal level. This has been a significant drag on overall employment, as we said.
Harlan Green © 2015
Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen