There are a lot of different way to assess the state of the US job market. With a variety of data points being reported, it is sometimes difficult for business leaders to make an accurate interpretation of what the numbers mean. The latest data highlights a job market that is more resilient than is reflected by the mainstream rhetoric.
US Private Sector Employment, which covers total private-sector, nonfarm employment in the US, stood at 117.4 million people as of June. This is substantially lower that the record-high 130.0 million seen in November 2019, but up noticeably from the COVID-19-pandemic low point of 108.2 million in April of this year. In other words, we have brought back 9.2 million jobs over the last two months. This is good news for the economy. Our latest analysis indicates that the low point in Private Sector Employment was in the second quarter of this year, as we projected.
The non-seasonally-adjusted US Unemployment Rate, which represents the rate of unemployment for the non-institutionalized population of the US, is also providing some cause for cautious optimism. After reaching a post-WWII record high of 14.4 percent in April, reflecting the tremendous impact of the black swan events that occurred in the first quarter of this year, the Unemployment Rate declined to 11.2 percent as of June. We had projected that the second quarter of 2020 would be the worst for the Unemployment Rate, and indications are in alignment with our outlook. However, it will be critical to watch the latest pandemic-related developments, as any steps made at the state or federal level to shut down the economy once again would be a significant risk factor for the job market and the expected economic recovery.
What does this data mean to you, as a decisionmaker and business leader? First, the resiliency of the job market so far should be an encouraging signal, one which supports our expectation for a recovery in the US macroeconomy (as represented by US Gross Domestic Product) commencing in the second half of this year and gaining momentum into 2021. Second, it should be a call to action. ITR is advising our clients to leverage the high levels of unemployment in preparation for their next rising trend. There is high-quality skilled labor available today that wasn't six months ago. Even if your business is not looking to expand staffing levels, you can still look at hiring as rotational; leverage it to get underperforming people out and bring in high performers at a discount due to the current economic reality. This will help you position your business to take full advantage of the rising trend that lies ahead.
If you’d like to discuss how the job market implications pertain to your specific industry and to your business, please reach out to us. We’re here to help.
