June Brings the Right Employment Numbers ... For the Wrong Reasons
It's that time of the month again, when the U.S. Bureau of Labor Statistics reports on employment numbers for the preceding month. Despite a more-or-less average boost in jobs (which essentially mirrors the last three months' rate of 221,000 new jobs per month) and a decline in the overall unemployment rate, it looks like job growth is still very much treading water ... as it has been for the past couple of years and more.
Economists say that the latest decline in unemployment reflects a decrease in overall labor force participation this time. (An interpretation also reflected in the drop in workforce participation to levels not seen since 1977; see this Associated Press story for more discussion). That's in place of the more usual cause — namely, increased job growth whittling away at the overall count of those out of work.
Likewise, wage growth continues flat, with an increase of only 2 percent overall over the past twelve month period. This is your classic case of a mixed blessing, where what's good in the numbers reported is offset by what's bad in the same overall set of numbers. The afore-cited AP story states that "the mixed data suggest the Federal Reserve may put off plans to raise short-term interest rates and end the stimulus effort that began in 2008" — and not without cause.
Given that the current ho-hum, slow growth mode status quo appears ready to continue indefinitely, I'd say the Fed will continue monitoring things closely. Fed officials probably won't be introducing rate hikes this fall, however, as Federal Reserve chair Janet Yellen and others have tentatively signaled in recent meetings and public announcements.
Diving down into Table A-14, and those numbers therein that related to IT — namely "Information" and "Professional and business services" — recent patterns also continue unabated. Unemployment is down for information (109,000 for June 2015 versus 150,000 for the same month in 2014), but overall sector size is also diminished (2.79 million for 2015 versus 2.88 million for 2014).
That trend is more muted but still present for professional and business services, which saw 1,042,000 unemployed in June 2014, and 818,000 for June 2015, which translates into sector sizes of 15.8 million in 2014 and 15.7 million for 2015. The loss of workforce percentage for information is 3.1 percent year-over-year, while that for professional and business services is only 0.6 percent.
Nevertheless, these are trends that are moving in the wrong direction, when it comes to overall prospects for those in IT. And for once, I'm getting some clarity about why employment remains relatively tight in IT despite a vanishingly small overall unemployment rate in the sector: Businesses and organizations can't help remaining shy about adding headcount. There's no clear mandate from the marketplace to add capability and capacity — to service an absence of growing demands for goods and services.
For almost as long as I've been following the US BLS reports as part of my overall IT outlook, my mantra has remained, "Hunker down, stay put, don't stick your neck out." So far, there haven't been enough compelling reasons to change this admonition, much I'd like to see that happen.
Alas, this is a case where "no new news ain't good news, either." All we can hope for at this point is some kind of as-yet-undiscovered impetus to move the needle of growth out of the orange zone, and into the green zone. Keep your fingers crossed!