Expanding Economy Drives Rise in Unemployment - and That's a Good Thing
Economics is a fascinating topic. Sometimes, when a seemingly negative statistic goes up ... that's a good thing, rather than a bad one. Case in point with the latest Employment Situation Summary from the U.S. Bureau of Labor Statistics: Unemployment edged up two-tenths of one percent from a near-record-low 3.8 percent to 4.0 percent for June.
Ordinarily, this would be a bad thing, but this time it's not. Why? Because we see some interesting drivers to the increase in that number. For one thing, the number of "reentrants to the workforce" increased by 204,000. This means that people who'd been sitting on the employment sidelines, not looking for work, have been encouraged enough by recent economic growth to get back into the job hunt.
That's a good thing, even though it increases the pool of the unemployed. For another thing, the civilian labor force grew by 601,000 in June, and labor force participation experienced a slight bump of 0.2 percent. That means more people are working, both in absolute numbers and in proportion to the overall population. That's also a good thing.
I'm still not seeing corresponding pressure on wages, however, to match increasing confidence and expectations of continuing growth. That is what is required to turn these funny "negative-but-also positive" numbers into a true hat trick for a real employment turnaround. Average hourly wages now stand at $26.98 and went up only $0.05 in June.
They're up by $0.72 (2.7 percent) since the same time last year. This is just barely tracking overall economic growth. We'll want to see more of a spike in wages to really get that A-OK feeling about the employment situation. But still, I'm inclined to see the latest report as a rare case of something that looks like bad news actually turning out to be good news. Good, but not great — not yet, anyway.
Digging into Some Details
Overall employment was up by 213,000 jobs for June. April and May numbers also moved upward for an average of 211,000 jobs added per month for that three-month period. Once again: This is good, but not great.
Up sectors for the economy in June included professional and business services (up 50,000 for June and 521,000 for the prior 12-month period), manufacturing (up 36,000 for June and 285,000 for the prior year), health care (up 25,000 for June and 309,000 for the prior year), with more minor gains for construction and mining.
The only down sector was retail (down 22,000 jobs for June, which nearly wipes out out May's 25,000 gains there). All other major sectors are mostly unchanged.
CompTIA's Employment Tracker for June shows steady but modest growth for IT employment, with a gain of 8,400 jobs in IT Sector Employment (companies that do IT for a living, so to speak). Overall employment in that sector stands at over 4.4 million.
IT Occupation Employment (IT professionals who work in IT for companies that aren't IT-focused) stands at about 4.75 million. This puts CompTIA's estimate of the total IT workforce at about 9.15 million for June. The occupation "half" (a little bigger, actually) does not show steady upward growth over time like the sector half does. A quick gander at the figures show it bouncing up and down quite a bit of late (though the swings are not huge).
Relatively big gainers for June, according to CompTIA, for IT jobs by sub-sectors of the IT Occupation side were Other Info services (including search portals) at +2,300 jobs, as well as IT and Software Services at +4,900 jobs. From a job postings perspective this translates into jobs for software developers at +6,000 jobs, as well as computer systems engineers and architects at +3,200 jobs.
I'm encouraged by continuing growth in employment for developers and engineers/architects, because these people usually help to drive further growth across all of IT (and the overall economy as well).
Despite President Trump's love of the word "great," and his proclivity to use that term in describing our economic growth of late, I'm still inclined to stick with "good" for June. That's good enough for me, though, and I hope it's also good enough for you, too!