{"id":1572,"date":"2019-07-31T14:43:25","date_gmt":"2019-07-31T18:43:25","guid":{"rendered":"https:\/\/naroffeconomics.com\/?p=1572"},"modified":"2019-07-31T14:43:25","modified_gmt":"2019-07-31T18:43:25","slug":"july-private-sector-jobs-and-second-quarter-employment-costs","status":"publish","type":"post","link":"https:\/\/naroffeconomics.com\/?p=1572","title":{"rendered":"July Private Sector Jobs and Second Quarter Employment Costs"},"content":{"rendered":"\n

KEY DATA:<\/strong> ADP: 156,000; Small: 11,000;\nLarge: 78,000\/ ECI (Over-Year): +2.7%; Wages: +2.9%; Benefits: +2.3%<\/p>\n\n\n\n

IN A\nNUTSHELL:<\/strong>  \u201cDespite decent job gains, worker compensation\ngains continue to fade, which is a real conundrum.\u201d<\/em><\/strong><\/p>\n\n\n\n

WHAT IT\nMEANS:<\/strong>  Our illustrious Fed Chair is concerned about\nthe economy and since growth has depended on strong consumer spending, the\nfocus has to be on job gains and worker compensation.<\/em><\/strong>  In both cases, conditions remain solid,\nthough not nearly as strong as one would expect.  Take payrolls.  According to the employment services firm\nADP, private sector hiring was solid in July, though nothing spectacular.  The issue is with small businesses, which are\nhardly hiring.<\/em><\/strong>  These firms are\nbeing battered by tight labor markets, which make it difficult to find\nworkers.  Small companies tend to have\nlimited or no be benefits and need part-time employees and if workers can find\nfull-time jobs with benefits, they will take it.  That is usually with larger firms, who are\nhiring at a strong pace.  Small\nbusinesses are also facing the reality that demand is shifting to online\npurchases, a place where they have significant problems competing.  So it is not a surprise they are losing\nout.  But the implication is that most\nhiring will occur at medium to large-size companies, a change from the past.<\/em><\/strong>  The hospitality, health care and\nadministrative services sectors continue to add workers solidly, though\nmanufacturing and mining have weakened.<\/em><\/strong><\/p>\n\n\n\n

With the supply of workers is constrained by the low\nunemployment rate, we should be seeing income gains accelerating.  That is just not happening.<\/em><\/strong>  Compensation is decelerating.  The Employment Cost Index rose at a solid but\nslower pace in the second quarter, marking the second consecutive quarter that\nworker compensation moderated.<\/em><\/strong>  Both\nwage gains and especially benefits increases have faded.<\/em><\/strong>  That is a real surprise, especially the sharp\ndrop in benefits growth.  Anecdotal\nstories have it that firms are using lots of non-monetary inducements to keep or\nattract workers.  It could be that those\nbenefits are not being captured by the government\u2019s survey. Indeed, government\nbenefits remain high and the public sector is limited in its ability to be\nimaginative in retaining and attracting workers.  So, we may be getting an incomplete picture\nof the compensation situation.MARKETS AND FED\nPOLICY IMPLICATIONS:<\/em> <\/em><\/strong>The Fed\u2019s rate\ndecision will be coming out soon so the markets will be focusing more on what\nis in the statement and what Chair Powell says at his press conference than on\nany economic number.  But the\ndata don\u2019t point to a faltering economy, only a moderating one.  With the economy expanding at trend growth in\nthe second quarter and with inflation at a pace in excess of the Fed\u2019s 2%\ntarget, there is no reason to cut rates. <\/em><\/strong>But Mr. Powell put the Fed into a straight\njacket and he has to loosen it at least a little today.  Where we go from here, though, is the real\nquestion and given the rapidity with which Whiplash Jay changes direction, I\nhave little idea what the next move will be. <\/em><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

KEY DATA: ADP: 156,000; Small: 11,000; Large: 78,000\/ ECI (Over-Year): +2.7%; Wages: +2.9%; Benefits: +2.3% IN A NUTSHELL:  \u201cDespite decent job gains, worker compensation gains continue to fade, which is a real conundrum.\u201d WHAT IT MEANS:  Our illustrious Fed Chair is concerned about the economy and since growth has depended on strong consumer spending, the … Continue reading July Private Sector Jobs and Second Quarter Employment Costs<\/span> →<\/span><\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[],"class_list":["post-1572","post","type-post","status-publish","format-standard","hentry","category-economic-indicators"],"_links":{"self":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1572","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1572"}],"version-history":[{"count":1,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1572\/revisions"}],"predecessor-version":[{"id":1573,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1572\/revisions\/1573"}],"wp:attachment":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1572"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1572"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1572"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}