July 8, 2023 | Employment Report, JOLTs, Work From Home Productivity and Understanding Priorities as you Near Retirement

Employment Report
The employment report showed nonfarm payrolls increased 209,000 in the month of June which was well below the expectation for growth of 240,000. Payrolls were also revised lower by 110,000 in the months of April and May. The report marked the slowest month for job creation since December 2020 when payrolls fell by 268,000. So far this year, we have seen a 6-month average of 278,000 in monthly job creation which compares to the average of 399,000 in 2022. While this all may sound like bad news, I believe it remains positive as the labor market is softening, but it still remains strong. In fact, if we look back to 2018 job creation averaged 223,000 per month and in 2019 it was just 176,000 per month. Wage growth in the month was 4.4% compared to last year, which is in line with many readings this year and softer than last year's peak of 5.9% in March. Job growth remained strong in areas like health care and social assistance (+65,200), construction (+23,000), and professional and business services (+21,000). Growth in the leisure and hospitality sector has cooled as the group was up just 21,000 jobs in the month. It still remains 2.2% or 369,000 jobs below its February 2020 level. Government employment was a big gainer in the month as it added 60,000 jobs to the report. I generally don't like to see Government jobs leading the charge, but the sector still remains 161,000 jobs below its February 2020 level. Areas that were soft in the report included transportation and warehousing (-6,900) and retail trade (-11,200). The participation rate remains stuck at 62.6% as it has been there now for four consecutive months. In February 2020 it was at 63.3%. While some may point to the younger generation not working, I believe most of this stems from more people retiring. In fact, the prime-age participation rate which measures those between 25 and 54 years of age rose to 83.5%, its highest in 21 years. Overall, I think this report provides more evidence we could see that soft landing.

 

JOLTs
The Job Openings and Labor Turnover Survey (JOLTs) showed job openings fell by 496,000 in the month of May to 9.8 million. While this may sound concerning, this level still produces 1.6 jobs per available worker. It is important to understand this remains above pre-pandemic levels and I believe we can have job openings continue to decline and still have a good labor market. Layoffs also remained little changed at 1.6 million, this is also still below pre-pandemic levels.

 

Work From Home Productivity
You may hear some arguments from people that work from home about how productive they are, but data from the BLS, known as the Bureau of Labor Statistics, states otherwise. It was discovered that people working full-time from home put in 2 1/2 hours fewer per day than the workers who go into the office. If workers were to work at the same rate as they did back in 2019, our economy would be more productive, and the labor shortage would be less problematic. It was estimated that if workers filled up offices at the 2019 rate and worked 8.2 hours per day it would add roughly 800,000,000 weeks of more work, a nice boost to productivity. Maybe after Covid people have become used to not working and have become lazy?