While the unemployment rate continues to hover at just under 10 percent, the fear that this recovery may be jobless appears to be subsiding a little. With the exception of April when it edged up slightly, the U.S. unemployment rate has held steady at 9.7 percent according to the U.S. Department of Labor Statistics.
While much of the positive news is related to temporary workers hired for the U.S. Census, private sector employment edged upward, adding 41,000 jobs in May, and manufacturing employment continues to grow, adding 29,000 in the past month.
Perhaps more important to evaluating the labor market is the outlook for the labor market. The latest Manpower Employment Outlook Survey revealed that employers are more optimistic about hiring plans in third quarter 2010 than they were a year ago. And some of the most positive responses came out of the Wholesale & Retail Trade and Nondurable Goods Manufacturing sectors, with net outlook of +15 percent and +12 percent, respectively.
Respondents to the Institute for Supply Management’s survey for its monthly Report on Business were “bullish” about job growth as well in May, according to Daniel J. Meckstroth, chief economist for the Manufacturers Alliance/MAPI. “The supply chain pipeline is filling with orders and manufacturing firms are reluctantly, but out of necessity, adding staff,” he says.
But, even with these gains, recovery in the labor market will be slow, according to Adam J. Fein, PhD., of Pembroke Consulting. Since 2007, about 8 million jobs have been lost, and the U.S. may not reach pre-recession employment levels until 2013 or 2014. Fein presented his outlook for 2010 during an MDM Webcast on April 27.
Here are some other key indicators from the last month:
Manufacturing expanded in May for the 10th consecutive month, and the overall economy grew for the 13th consecutive month, according to the latest Manufacturing ISM Report On Business. The Purchasing Managers Index was at 59.7 percent, indicating expansion.
Recovery continues to broaden with 16 of the 18 manufacturing industries reporting growth in May. Only one industry – Petroleum & Coal Products – reported contraction.
Construction spending in April 2010 was estimated at a seasonally adjusted annual rate of $869.1 billion, 2.7 percent above the revised March estimate of $845.9 billion, according to the U.S. Census Bureau of the Department of Commerce. The April figure is 10.5 percent below the April 2009 estimate of $971.4 billion. During the first four months of this year, construction spending amounted to $249.6 billion, 13.2 percent below the $287.5 billion for the same period in 2009.
Privately owned housing starts in April were at a seasonally adjusted annual rate of 672,000, according to the U.S. Census Bureau and the Department of Housing and Urban Development. This is 5.8 percent above the revised March estimate of 635,000 and 40.9 percent above the revised April 2009 rate of 477,000.
The Chicago Fed Midwest Manufacturing Index increased 1.2 percent in April, to a seasonally adjusted level of 85.2 (2002 = 100). Revised data show the index rose 1.5 percent in March to 84.2. The Federal Reserve Board’s industrial production index for manufacturing (IPMFG) increased 1.1 percent in April. Regional output in April edged up 7.5 percent from a year earlier, and national output increased 6.5 percent. April marks the first time since February 2008 that the CFMMI’s year-over-year change has exceeded the IPMFG’s.
Led by continued improvements in production- and employment-related indicators, the Chicago Fed National Activity Index increased to 0.29 in April, up from 0.13 in March. April marked the highest level of the index since December 2006 and the third time in the past four months that the index indicated above-average economic activity. Three of the four broad categories of indicators that make up the index made positive contributions in April, while the consumption and housing category made the lone negative contribution. The index’s three-month moving average, CFNAI-MA3, increased to -0.03 in April from -0.09 in March, reaching its highest level since February 2007. April’s CFNAI-MA3 suggests that growth in national economic activity was very near its historical trend. With the index still slightly below trend, there remains some economic slack, suggesting subdued inflationary pressure from economic activity over the coming year.
New orders for manufactured durable goods in April increased $5.6 billion or 2.9 percent to $193.9 billion, according to the U.S. Census Bureau. This was the fourth increase in the last five months and followed a slight March decrease. Excluding transportation, new orders decreased 1.0 percent. Excluding defense, new orders increased 3.4 percent.