Companies in the U.S. are relying on existing workers and temporary employees instead of hiring, helping to explain why payrolls grew less than forecast in June.
The average workweek rose for the first time since February and temporary staffing climbed for a third consecutive month, according to Labor Department figures issued in Washington yesterday.
The report also showed payrolls advanced by 80,000 workers, less than the median estimate in a Bloomberg News survey of economists, and the jobless rate held at 8.2 percent.
The need to boost hours and add provisional employees is a sign that sales are holding up in the face of a deepening slump in Europe and a slowdown in China and the rest of the world.
Nonetheless, businesses may lack conviction that revenue gains will be sustained in light of the threats, making them reluctant to permanently expand payrolls.
“Firms are still seeing an increase in demand, and there is a need for more labor,” said Nigel Gault, chief U.S. economist at IHS Global Insight in Lexington, Massachusetts.
“But there are so many risks out there that businesses don’t want to commit to hiring full-time employees.”
The median estimate of 84 economists surveyed by Bloomberg projected a 100,000 gain in payrolls. Forecasts ranged from increases of 35,000 to 165,000.
The May advance in employment was revised to 77,000 from a previously reported 69,000. The lack of a pickup in hiring fueled concern the world’s largest economy was slowing, pushing stocks down.
The Standard & Poor’s 500 Index dropped 0.9 percent, erasing a weekly gain, to close yesterday at 1,354.68.
Longer Workweek
The average workweek climbed by six minutes to 34.5 hours in June, the report showed. Temporary staffing rose by 25,200, the biggest increase since February.
Candace Bailey, 24, has adapted her job-hunting strategy to weaker employment conditions.
“I’m primarily looking for full-time, but since it’s been a while, I’m definitely open to temporary work as well,” said Bailey, who lost her marketing job in Washington two months ago.
“In the past two weeks or so, I’ve been definitely looking at temporary work until I find a full-time job.” The pickup in hours “suggests there might be a little better momentum in the economy,” Bruce Kasman, chief economist for JPMorgan Chase & Co. in New York, said on a conference call.
At the same time, there is “an absence of a real desire by firms to act on that in terms of hiring.” The increase in the average workweek would be equivalent to a 325,000 gain in payrolls, according to estimates by economists at Nomura Securities International Inc. headed by Lewis Alexander.
Auto Sales
Automobiles are one area where demand is holding up. Cars and light trucks sold at a 14.1 million annual rate in June, up from May’s 13.7 million pace, Ward’s Automotive Group data showed.
General Motors Co. (GM), Ford Motor Co. (F) and Chrysler Group LLC reported U.S. sales that topped analysts’ estimates, helping the industry surpass projections and stay on pace for the best year since 2007.
“We’re seeing strong demand for our current products as well as for our new models,” Bill Krueger, vice chairman of the Americas for Nissan Motor Co., said in a telephone interview yesterday.
The Yokohama, Japan-based automaker plans to boost hours, add shifts or increase payrolls at plants in Tennessee and Mississippi “to really have the supply catch up with demand,” he said.
Manufacturers were among those asking existing employees to put in a longer workweek last month.Factory overtime climbed to 4.7 hours in June on average, the most in five years, yesterday’s report showed.
Hourly Earnings
In another bright spot, workers’ average hourly earnings rose to $23.50 in June from $23.44 in the prior month, yesterday’s report showed.
“For the 92 percent of folks who have jobs, their incomes are rising, raises are still happening,” said Chris Varvares, senior managing director of Macroeconomic Advisers LLC in St. Louis. Consumers are benefiting from falling gasoline prices and lower inflation.
The cost of living dropped in May by the most in more than three years, Labor Department figures showed last month.
A gallon of regular fuel at the pump cost an average $3.36 as of July 5, down from this year’s peak of $3.94 in early April, according to AAA, the biggest U.S. auto group. Retailers reported this week that same-store sales rose 0.3 percent in June from a year earlier, based on results from more than 20 companies tracked by Retail Metrics Inc.
Luxury chains such as Saks Inc. (SKS) and discounters like TJX Cos. topped analysts’ expectations, while stores targeting middle-income consumers trailed projections.
Lowe’s Cos.
“What we are seeing today from an income perspective is our economy is modestly adding jobs,” Robert Hull, chief financial officer at Lowe’s Cos., the second-largest U.S. home- improvement retailer, said at a June 26 consumer conference in Boston.
“That’s the good news. The bad news is it’s not sufficient to have a material impact on the unemployment rate.”
The “mixed” jobs report suggests that Federal Reserve policy makers are unlikely to take further action to boost the economy at their next meeting, such as a third round of so- called quantitative easing, said David Greenlaw, a managing director and economist at Morgan Stanley in New York.
“We don’t think the report was quite bad enough to tip the scales toward doing something like QE3,” Greenlaw said.
“But I certainly think there’s plenty of fodder for discussion and definitely some indication that the Fed needs to be more worried about prospects for growth going forward.”
Presidential Election
Yesterday’s report deprived President Barack Obama of progress on voters’ overriding concern with just four months before the election. Obama, speaking yesterday at a campaign stop in Poland, Ohio, called the addition of new jobs “a step in the right direction” though the economy has to grow “even faster.”
Republican presidential candidate Mitt Romney called the report “another kick in the gut.” While Romney has suggested that Obama has done a worse job managing the economy than President Jimmy Carter, investors have given the U.S. a vote of confidence.
The S&P 500 has surged 68 percent under Obama, more than three times the 19 percent increase during Carter’s first 3-1/2 years in office starting in 1977.
Although unemployment is higher than the 7.5 percent level in May 1980, inflation is lower. Consumer prices rose 1.7 in May from a year earlier, compared with a 14.4 percent increase in May 1980.
Longest Stretch
Still, unemployment has exceeded 8 percent since February 2009, the longest such stretch since monthly records began in 1948.
Among those also having trouble finding full-time work is Dave Marshall of Tampa, Florida. The 23-year-old Army reservist, who works part-time for two security firms in the area, said he has been unable to find a job that utilizes his degree in sociology from the University of Florida in Gainesville.
“I am getting edged out by people with experience,” Marshall said. “There have been some entry-level positions that I have applied for, but the economy is so bad that the people who have been let go are also applying for entry-level positions and a lot of them have two, three years of experience.”
Nicole Sandler, 52, lost her job at Air America in January 2010 when the radio station closed. She was ineligible for unemployment benefits because she was a contractor.
Temporary Jobs
Sandler moved in with her fiance in Coral Springs, Florida, in April 2011 when she lost her house in Miami. She gets about $1,000 a month from a webcast she puts together five nights a week and takes temporary radio jobs when she can get them.
“I work but I’m still technically unemployed,” said Sandler. “I guess I could try to find a job doing something else, but at 52 to take an entry-level job I may as well do what I’m doing.
What am I going to do, work in a supermarket?” The jobs figures showed private employment, which excludes government agencies, increased 84,000 in June, the weakest in 10 months. Retailers cut payrolls by 5,400, while manufacturers added 11,000 workers.
The report “reminds everyone that confidence matters,” said Joel Naroff, president of Naroff Economic Advisors in Holland, Pennsylvania.
“In June, the European debt issue reached a boil and a meltdown could not be ruled out.That had to have a major impact on business confidence.”
Uncertainty about the U.S. government’s fiscal outlook may also be hampering hiring plans. Congress has yet to resolve the so-called fiscal cliff, which represents more than $600 billion in higher taxes and reductions in defense and other government programs in 2013 that will take place without action.
The best strategy for companies to follow when confronted with such uncertainty ahead of Dec. 31 is to “stay lean and keep your inventories taut,” Sandy Cutler, chief executive officer of industrial equipment-maker Eaton Corp. (ETN) in Cleveland, told a conference May 31.
bloomberg.com
The average workweek rose for the first time since February and temporary staffing climbed for a third consecutive month, according to Labor Department figures issued in Washington yesterday.
The report also showed payrolls advanced by 80,000 workers, less than the median estimate in a Bloomberg News survey of economists, and the jobless rate held at 8.2 percent.
The need to boost hours and add provisional employees is a sign that sales are holding up in the face of a deepening slump in Europe and a slowdown in China and the rest of the world.
Nonetheless, businesses may lack conviction that revenue gains will be sustained in light of the threats, making them reluctant to permanently expand payrolls.
“Firms are still seeing an increase in demand, and there is a need for more labor,” said Nigel Gault, chief U.S. economist at IHS Global Insight in Lexington, Massachusetts.
“But there are so many risks out there that businesses don’t want to commit to hiring full-time employees.”
The median estimate of 84 economists surveyed by Bloomberg projected a 100,000 gain in payrolls. Forecasts ranged from increases of 35,000 to 165,000.
The May advance in employment was revised to 77,000 from a previously reported 69,000. The lack of a pickup in hiring fueled concern the world’s largest economy was slowing, pushing stocks down.
The Standard & Poor’s 500 Index dropped 0.9 percent, erasing a weekly gain, to close yesterday at 1,354.68.
Longer Workweek
The average workweek climbed by six minutes to 34.5 hours in June, the report showed. Temporary staffing rose by 25,200, the biggest increase since February.
Candace Bailey, 24, has adapted her job-hunting strategy to weaker employment conditions.
“I’m primarily looking for full-time, but since it’s been a while, I’m definitely open to temporary work as well,” said Bailey, who lost her marketing job in Washington two months ago.
“In the past two weeks or so, I’ve been definitely looking at temporary work until I find a full-time job.” The pickup in hours “suggests there might be a little better momentum in the economy,” Bruce Kasman, chief economist for JPMorgan Chase & Co. in New York, said on a conference call.
At the same time, there is “an absence of a real desire by firms to act on that in terms of hiring.” The increase in the average workweek would be equivalent to a 325,000 gain in payrolls, according to estimates by economists at Nomura Securities International Inc. headed by Lewis Alexander.
Auto Sales
Automobiles are one area where demand is holding up. Cars and light trucks sold at a 14.1 million annual rate in June, up from May’s 13.7 million pace, Ward’s Automotive Group data showed.
General Motors Co. (GM), Ford Motor Co. (F) and Chrysler Group LLC reported U.S. sales that topped analysts’ estimates, helping the industry surpass projections and stay on pace for the best year since 2007.
“We’re seeing strong demand for our current products as well as for our new models,” Bill Krueger, vice chairman of the Americas for Nissan Motor Co., said in a telephone interview yesterday.
The Yokohama, Japan-based automaker plans to boost hours, add shifts or increase payrolls at plants in Tennessee and Mississippi “to really have the supply catch up with demand,” he said.
Manufacturers were among those asking existing employees to put in a longer workweek last month.Factory overtime climbed to 4.7 hours in June on average, the most in five years, yesterday’s report showed.
Hourly Earnings
In another bright spot, workers’ average hourly earnings rose to $23.50 in June from $23.44 in the prior month, yesterday’s report showed.
“For the 92 percent of folks who have jobs, their incomes are rising, raises are still happening,” said Chris Varvares, senior managing director of Macroeconomic Advisers LLC in St. Louis. Consumers are benefiting from falling gasoline prices and lower inflation.
The cost of living dropped in May by the most in more than three years, Labor Department figures showed last month.
A gallon of regular fuel at the pump cost an average $3.36 as of July 5, down from this year’s peak of $3.94 in early April, according to AAA, the biggest U.S. auto group. Retailers reported this week that same-store sales rose 0.3 percent in June from a year earlier, based on results from more than 20 companies tracked by Retail Metrics Inc.
Luxury chains such as Saks Inc. (SKS) and discounters like TJX Cos. topped analysts’ expectations, while stores targeting middle-income consumers trailed projections.
Lowe’s Cos.
“What we are seeing today from an income perspective is our economy is modestly adding jobs,” Robert Hull, chief financial officer at Lowe’s Cos., the second-largest U.S. home- improvement retailer, said at a June 26 consumer conference in Boston.
“That’s the good news. The bad news is it’s not sufficient to have a material impact on the unemployment rate.”
The “mixed” jobs report suggests that Federal Reserve policy makers are unlikely to take further action to boost the economy at their next meeting, such as a third round of so- called quantitative easing, said David Greenlaw, a managing director and economist at Morgan Stanley in New York.
“We don’t think the report was quite bad enough to tip the scales toward doing something like QE3,” Greenlaw said.
“But I certainly think there’s plenty of fodder for discussion and definitely some indication that the Fed needs to be more worried about prospects for growth going forward.”
Presidential Election
Yesterday’s report deprived President Barack Obama of progress on voters’ overriding concern with just four months before the election. Obama, speaking yesterday at a campaign stop in Poland, Ohio, called the addition of new jobs “a step in the right direction” though the economy has to grow “even faster.”
Republican presidential candidate Mitt Romney called the report “another kick in the gut.” While Romney has suggested that Obama has done a worse job managing the economy than President Jimmy Carter, investors have given the U.S. a vote of confidence.
The S&P 500 has surged 68 percent under Obama, more than three times the 19 percent increase during Carter’s first 3-1/2 years in office starting in 1977.
Although unemployment is higher than the 7.5 percent level in May 1980, inflation is lower. Consumer prices rose 1.7 in May from a year earlier, compared with a 14.4 percent increase in May 1980.
Longest Stretch
Still, unemployment has exceeded 8 percent since February 2009, the longest such stretch since monthly records began in 1948.
Among those also having trouble finding full-time work is Dave Marshall of Tampa, Florida. The 23-year-old Army reservist, who works part-time for two security firms in the area, said he has been unable to find a job that utilizes his degree in sociology from the University of Florida in Gainesville.
“I am getting edged out by people with experience,” Marshall said. “There have been some entry-level positions that I have applied for, but the economy is so bad that the people who have been let go are also applying for entry-level positions and a lot of them have two, three years of experience.”
Nicole Sandler, 52, lost her job at Air America in January 2010 when the radio station closed. She was ineligible for unemployment benefits because she was a contractor.
Temporary Jobs
Sandler moved in with her fiance in Coral Springs, Florida, in April 2011 when she lost her house in Miami. She gets about $1,000 a month from a webcast she puts together five nights a week and takes temporary radio jobs when she can get them.
“I work but I’m still technically unemployed,” said Sandler. “I guess I could try to find a job doing something else, but at 52 to take an entry-level job I may as well do what I’m doing.
What am I going to do, work in a supermarket?” The jobs figures showed private employment, which excludes government agencies, increased 84,000 in June, the weakest in 10 months. Retailers cut payrolls by 5,400, while manufacturers added 11,000 workers.
The report “reminds everyone that confidence matters,” said Joel Naroff, president of Naroff Economic Advisors in Holland, Pennsylvania.
“In June, the European debt issue reached a boil and a meltdown could not be ruled out.That had to have a major impact on business confidence.”
Uncertainty about the U.S. government’s fiscal outlook may also be hampering hiring plans. Congress has yet to resolve the so-called fiscal cliff, which represents more than $600 billion in higher taxes and reductions in defense and other government programs in 2013 that will take place without action.
The best strategy for companies to follow when confronted with such uncertainty ahead of Dec. 31 is to “stay lean and keep your inventories taut,” Sandy Cutler, chief executive officer of industrial equipment-maker Eaton Corp. (ETN) in Cleveland, told a conference May 31.
bloomberg.com
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