MRINetwork Analysis of the BLS Employment Situation Report

MRINetwork Analysis of the BLS Employment Situation Report

Feburary 2012 Employment

The full report can be seen here: http://www.bls.gov/news.release/empsit.htm.

According to the Labor Department, the U.S. economy added 227,000 jobs in February, the third month in a row of job gains in excess of 200,000 positions. Unemployment remained at 8.3 percent, its lowest point since early 2009. Revisions to previous months showed that January added 41,000 more jobs than previously reported and December added 20,000 more.

Growth was concentrated in the services sector, however, there was meaningful growth in important segments of manufacturing—including machinery, fabricated metals, and transportation equipment—all three harbingers of a manufacturing economy spinning up. In the services sector, the only significant loss was of 35,000 positions from general merchandise stores, though it was likely a continuation of the ramp down from holiday hiring, rather than a sign of changing tides for retail.

Professional and business services were responsible for more than a third of all job growth in February, with growth in accounting and bookkeeping services (7,300), architectural and engineering services (4,300), computer system design services (10,200), and managing and consulting services (7,400). Healthcare services accounted for more than a quarter (61,100) of jobs produced during the month. Lastly, food services and drinking places added more than 40,000 positions as workers with a bit more disposable income and more confidence in the stability of that income have begun to go out to eat and drink a bit more.

On an education level-basis, new positions created were exclusively being filled by those with 4-year degrees and up. The total number of employees holding a 4-year degree or higher rose by more than 380,000 during the month. The professional and managerial unemployment rate fell from 4.9 to 4.2 percent year-over-year.

Unfortunately for trend spotters, February, March, and April of 2011 also saw 200,000+ job growth before decelerating during the summer months. The reasons blamed for job growth falling—such as rising gas prices, a European debt crisis, and Middle East instabilities—all remain on the horizon. Yet, this round of job reports adding in excess of 200,000 at a time started two months earlier than last time around, and is being met more strongly with rising consumer confidence.

While the trend may seem similar to the one that fizzled a year earlier, it may also be just positive enough to have reached an “escape velocity”, as Patrick O’Keefe, the director of economic research at consulting firm J. H. Cohn, characterized it to The New York Times. Enough jobs are being created to add enough consumers to the market to necessitate more employees be hired.

The Hemline Index(and what it says about the economy)

When Fall Fashion Week rolled out in New York in February, many designers were reversing course on their hem lengths—and not always in the same direction. While there were not many mini-skirts, there also were fewer of the full-length gowns than were seen last season. Some designers—most notably Alexander Wang—chose to go with several seemingly low hemlines, but then introduced soaring slits and gaps causing them to almost defy hemline definition.
The hemline index as calculated by Business Inside—yes it is a real index—rose to 44.38 from 35.04 last season. In a time when economic indicators are as plentiful as they are mixed, it may be one of the most apt indicators of the time. Lore says when the economy is good, hemlines rise and when soured, the hemlines fall. While hemlines seem to be going in many directions at once this season, the average is rising—much like the U.S. economy.
While the economy gains speed, workforce managers are feeling the pinch of a tightening talent market. A recent Corporate Executive Board study showed the average number of applications received per position fell to 118 from 187 one year earlier. Of those applications, respondents to the study said just one-third met the basic requirements for the position they were applying for.
Late last year, a survey of C-Level executives around the world by Lloyd’s of London ranked talent and skills shortages as the second-largest risk to their business. In 2009, talent worries were ranked as just the 22nd largest concern.
“The scales of the labor market have clearly shifted over the last six-to-twelve months, and now we are seeing that accelerating in the professional ranks,” says Rob Romaine, president of MRINetwork. “Top talent is no longer looking at a stable job and saying, ‘I’m happy to at least have that.’ Rather, they are opening up when recruiters call and are starting to explore what will really make them happy—financially or otherwise.”
Since early in 2010, the number of people who voluntarily left a position each month has been steadily rising to nearly 2 million, up more than 30 percent from its lows. “Having employees more interested in pursuing new opportunities is a double-edged sword for organizations,” says Romaine. “It’s going to be hard not to lose some top performers, as they will likely have the most opportunities presented to them. But while the field of top performers who are actively applying for positions is still very low, the numbers who are open to recruiting calls now is above average.”
During the years of tough economic times, the fear of the unknown was enough to keep many top performers in place. Although recent positive employment and economic news has not removed the possibility of another slowdown, it has given the workforce enough confidence to accept the risk associated with changing jobs.
“The economy will continue to be in a fragile place for much of the near future, with profit margins closely guarded and customers highly cost-conscious. Losing key staff or having continuity-of-services issues in this stage of a recovery will be damaging,” notes Romaine. “On the other hand, the worst possible outcome of bringing in top talent right now is that they will take pressure off existing staff, decrease turnover, and put a company in a powerful position to capture market share.”