photo by: John and Keturah
Yet another unemployment report delivered a mixture of good and bad news Friday. The national jobless rate dropped to 9.5% in June from 9.7% in May — but the U.S. still lost 125,000 jobs.
Many economists expected the unemployment rate to actually increase, and weak expectations make this a pleasant surprise. But it’s still a high number, and discouraging for people who are out of work and have been for a very long time.
There are some reasons to be at least a little optimistic as the economy makes a slow climb back to recovery.
The first is momentum – employment is among the key criteria to drop as a recession sets in, and it’s also among the last indicators to climb at its end.
“Generally the unemployment rate goes up early in a recovery period,” says Bob Brusca, chief economist at FAO Economics. “It’s a sign that people who’ve been out of work and discouraged for a long time are getting more active in the economy.”
Also, the decline in job numbers in this report owes a lot to the once-in-a-decade employment surge created by massive government hiring for the 2010 U.S. Census. About 225,000 of those 433,000 temporary jobs are now over, and that created a net loss of jobs for June.
Census questionnaires aside, there are encouraging signs that businesses are actually gearing up for hiring. There was a net gain of 83,000 private sector jobs in the Labor Department report, and indications that there are more to come.
Monster Worldwide, the online recruiting company, on Thursday said its employment index rose to 141 points in June from 134 in May. The index, a measure of how many jobs are available, is up 21% from a year ago, and was the best showing in almost four years, the company said.
Recovery Still Slow…
Make no mistake, though, the recovery will be slow . “The whole process takes several months, from a business making a decision to expand the headcount to actual hiring,” says Tim Boyd, an analyst at MKM Partners.
This has been especially discouraging for people who have been out of work for long enough to stop receiving unemployment benefits.
One of the more disheartening employment trends during the past recessions has been the ever-longer average unemployment period. In June, nearly half (45.5%) of all unemployed individuals had been out of work for 27 weeks or longer, according to the Bureau of Labor Statistics, compared with 29.6% in June 2009.
“People have expected more job gains faster, and they aren’t getting them,” says Boyd.
… But Job Cuts Also Slowing Down
If nothing else, job seekers and anyone simply anxious about the unemployment rate can take comfort that the pace of job cuts is slowing.
Private employers have announced 297,677 job cuts in the first six months of 2010, according to a survey by outplacement consultancy Challenger, Gray & Christmas. That’s only one-third of the first-half total in 2009. It’s also the lowest figure for that time period since 2000, when the mid-year total was 223,421.
John Challenger, chief executive of Challenger, Gray & Christmas, explained that the private sector jobs picture really does offer some positive indications, just not this week.
“With the exception of organizations in the government and non-profit sector, employers are looking six months ahead and apparently do not see a reason to make additional reductions in payrolls,” he said.
A job seeker’s own expectations and urgent need for a paycheck rarely sync up with how companies actually hire, but the experts are starting to see some encouraging signs.
“People may be thinking about recruiting and hiring again,” says Boyd.
At the very least, people who have jobs can probably feel more secure. Although job creation can vary quite a lot in the beginning of a recovery, Challenger says looking past Friday’s unemployment headlines indicates a more encouraging set of prospects for the rest of the year.
“Those who are looking may start to see some success,” he says. “Looking ahead, most employers are growing more and more confident and this will inevitably lead to increased hiring.”