Join        Login             Stock Quote

Employment Data: Structural Issues Remain To Complicate Outlook

 May 04, 2012 01:12 PM

(By R. Chandrasekaran) The job data announced by the Government has disappointed economists as well as market men. Though there are gains from sectors such as manufacturing, health, education and business services, there are some weakness in construction and government that resulted in smaller than predicted gains. There are also structural issues that remain and could complicate the outlook further.

In the last three months, job gains averaged 176K with the private sector witnessing 183K average jobs. In the same period, manufacturing gains averaged 31,000, while the private service sector jobs averaged 111K. Construction employment would have benefited from the seasonal factors in the initial months, and it was likely that some payback was witnessed in March and April.

[Related -Reversals After a Gap on the Open Could Mean Anything]

Though there seemed to have been cyclical recovery or expansion with more jobs in manufacturing as well as non-manufacturing, the recovery is below par as State and local government witnesses restructuring, economist from Wells Fargo wrote in a research note.

Importantly, income growth maintains the modest job gains thus suggesting consumer spending supports sustained economic growth. But the rate of gains remains slower compared to the previous two economic expansions, according to Wells Fargo economist. Aggregate worked hours grew 0.1 percent and 2.1 percent on a yearly basis in the last three months. In the meantime, average hourly earnings witnessed 1.8 percent year-over-year.

Meanwhile, long-term jobless and a falling participation rate remain issues. This was evident in the continued elevated level of the median duration of jobless and the lowest participation pace after 1979. The extension of jobless gains has also some influence on jobless duration. The larger the issue suggests that many labors don't have the required skill sets for employers in the location where they are seeking jobs. This also causes long spells of jobless or a withdrawal from the labor force, views Wells Fargo.

[Related -Jobless Claims Fall To 15-Year Low]

The wider difference in jobless by education also reflects the changed state of labor demand versus the romanticized labor market of 30 years following the World War II. At that point of time, there was outsized demand for low and semi-skilled workers as a result of post-war consumer boom and limited gains from technology. This has completely diminished currently. This structural issue clearly suggests that there should be job-specific skills development. Given the current situation, the structural issues will continue to remain and could make the outlook difficult.

iOnTheMarket Premium


Post Comment -- Login is required to post message
Alert for new comments:
Your email:
Your Website:

rss feed

Latest Stories

article imageReversals After a Gap on the Open Could Mean Anything

Yesterday stock indexes gapped up on the open but then reversed course to close sharply lower. This type of read on...

article imageJobless Claims Fall To 15-Year Low

After reading today’s weekly update on jobless claims the Fed’s comment yesterday that “economic activity read on...

article imageGreece, EMU and Democracy

One more post on Greece, possibly not the last read on...

article imageA Tangled Tale Of Rate Hikes & Inflation Expectations

The Federal Reserve continues to signal that it will start raising interest rates later this year, read on...

Popular Articles

Daily Sector Scan
Partner Center

Related Articles:

Greece, EMU and Democracy
More Articles on: Economics Data

Fundamental data is provided by Zacks Investment Research, and Commentary, news and Press Releases provided by YellowBrix and Quotemedia.
All information provided "as is" for informational purposes only, not intended for trading purposes or advice. iStockAnalyst.com is not an investment adviser and does not provide, endorse or review any information or data contained herein.
The blog articles are opinions by respective blogger. By using this site you are agreeing to terms and conditions posted on respective bloggers' website.
The postings/comments on the site may or may not be from reliable sources. Neither iStockAnalyst nor any of its independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. You are solely responsible for the investment decisions made by you and the consequences resulting therefrom. By accessing the iStockAnalyst.com site, you agree not to redistribute the information found therein.
The sector scan is based on 15-30 minutes delayed data. The Pattern scan is based on EOD data.