Small Silver Lining in August Jobs Data
This labor day weekend we learned that the US economy created no new jobs in August, resulting in a 2.2% drop in the stock market on Friday.
After looking at the data in historic perspective, I want to point out some of the dynamics taking place and give you a slightly more positive perspective.
- Since May of 2009 when the recession hit hardest (we were at 9.4% unemployment), the US economy has started to transform. Education and health services jobs are up 4.2%, professional and business services jobs are up 2.8% (this is a leading indicator), leisure and hospitality jobs are up .4%, and government jobs are down 3.4%. Manufacturing and construction jobs have stabilized this month.
- One of the biggest reasons for the continued downturn in jobs is the drop in government employment. During the last two years, the % of US employment which works for the government got as high as 17.5% (in June of 2010). This has now dropped back to 16.7%, which is ultimately a good thing. While the government stimulus certainly creates rapid employment, ultimately it crowds out private sector growth so in my mind the shift from government to private sector employment is a positive sign.
The data shown here points out how the US economy has changed.
Over the last two years we have shifted jobs toward health and education (aging of the country), professional and business services (growth in small business again), and away from construction and manufacturing. Manufacturing is starting to recover and real-estate is clearly still undergoing transformation.
All our conversations with client have revolved around how to globalize, retain and recruit top talent, and drive greater levels of engagement in their teams. I believe most business leaders have simply taken a “wait and see” approach to the economy (after the debt limit fiasco in Washington) but are still planning for global growth.
Ultimately the biggest driver of US economy will be the transformation of skills and re-education of the workforce. Most companies we talk with today are “education and training” zealots – looking for people with the right skills now. Ultimately most companies understand that if they cannot find those skills in the market (and new sourcing tools are making this easier), they have to build them internally – hence the continued growth in L&D spending this year.
Happy Labor Day weekend!