More often than not this year, economists’ expectations of job creation and the monthly unemployment rate have been too high – and, in part, July was no exception.
Economists expected the unemployment rate to drop from 4.4% to 4.3%, a 16-year low, and they were right about that, but they missed the boat on job creation. Employers created 209,000 jobs in July, beating expectations by 26,000.
This was similar to the jobs report in early July, which initially reported that 222,000 jobs had been created in June when 179,000 had been expected. The number of newly created jobs in June has since been revised upward to 231,000.
In all, the U.S. has created more than 1 million jobs since Donald Trump became president in January.
“This is an excellent job report for July,” said Brian Binke, principal at Berkley, Michigan-based Birmingham Group/Sanford Rose Associates, one of the largest recruiting firms/networks in the U.S. “Every sector had gains in employment.”
“It is evidence that President Trump is doing what he said he would do when it comes to creating jobs,” said Mary Kaarto, a Houston-based retired editor and now author and speaker.
Economists revised their unemployment outlook for 2018 from 4.1% to 3.8%. Unemployment has not been below 4% since 2000.
But there may be a dark lining to this silvery cloud.
“Clients often reach out to me when they feel stuck in job search or their efforts to secure employment have been disappointing,” said Roy Cohen, a New York-based career coach and author of “The Wall Street Professional's Survival Guide.”
“Over time I have discovered that the numbers have little bearing on job search and hiring. But they do have the power to discourage folks even further.”
Based on his observations, Cohen said, many people, not just the young, have left the workforce.
“Rather than acquire the necessary skills to remain valuable and relevant, there is a willingness to exit,” Cohen said. “There are plenty of jobs that go unfilled, but they either require demonstrated technical proficiency or they are viewed as undesirable.”
When unemployment figures are tabulated, individuals who have stopped looking for work are not counted. Neither are those who have returned to school or opted to stay home and care for family. To be counted, one must be actively seeking a job.
The unemployment rate among teenagers, for example, is lower, at 13.2%, than it has been in many years. But observers say that does not mean more young people are being hired. More likely it is an indication that young people are dropping out of the workforce.
Also many of those jobs may be part-time, temporary jobs.
“Employment always spikes in the summer as it does the two months leading up to Christmas,” Cohen said. “The numbers reflect expanded hiring for temporary summer jobs with companies like McDonald’s (MCD, Financial) and Disney (DIS, Financial), in traditional summer resort communities and in jobs that involve the out of doors like landscaping. These jobs are largely unskilled and relatively low paying.”
The August unemployment data will be released on Friday, Sept. 1.
Disclosure: I do not own any stocks mentioned in this article.
