Job creation, layoffs jump in June
The domestic economy added more jobs in June than it has during any month so far in 2015, according to the ADP National Employment Report released Wednesday.
The private sector churned up 237,000 jobs last month, as small businesses continued to set the pace in terms of job creation. Companies with fewer than 50 employees added 120,000 positions to the economy in June to match May's impressive gains.
"June job numbers came in at their highest level since December 2014," Carlos Rodriguez, president and CEO of ADP research firm, said Wednesday in a statement accompanying the report. "Small businesses continue to lead the way, adding over half of the total jobs this month."
Medium-sized businesses that employ between 50 and 499 workers added 86,000 jobs, up from the 63,000 positions added in May. And large businesses with at least 500 people on the payroll added 32,000 jobs, nearly double the 19,000 jobs created in May. Mega firms with at least 1,000 employees accounted for only 2 percent (or 5,000 jobs) of all positions created in June, a sharp drop-off from May's 21,000 additions (which accounted for about 10 percent of the month's new jobs).
"The U.S. job machine remains in high gear," Mark Zandi, chief economist at Moody's Analytics, said in a statement Wednesday. "Most encouraging is the healthy rate of job growth among the nation's smallest companies."
The professional and business services sector added an impressive 61,000 positions last month, while trade, transportation and utilities tacked on a whopping 50,000 new jobs. Construction job creation cooled to 19,000 positions last month from May's 28,000, but the manufacturing sector added 7,000 jobs after shedding 2,000 the month before.
"The current robust pace of job growth is double that needed to absorb the growth in the working age population," Zandi said of an increasingly bloated U.S. population between 15 and 64 years old. "The only blemish in the job market is the loss of jobs in the energy sector."
Oil prices bounced in recent months after bottoming out and are again on the rise (much to the dismay of the average consumer), but a stronger energy sector will ultimately be a good thing for U.S. job creation. Nearly 70,000 job cuts in the first six months of 2015 were attributed to low oil prices, according to a recent job cuts report issued by Challenger, Gray & Christmas research firm.
"We have already started to see a decline in oil-related job cuts as prices have begun to stabilize," John Challenger, CEO of Challenger, Gray & Christmas, said in a statement accompanying the report. "Over the past two months, oil prices were blamed for just 1,297 job cuts. In contrast, oil prices caused 20,675 job cuts in April."
But job cuts and layoffs in June shot up 9.3 percent from May and about 43 percent from June 2014, as nearly 45,000 positions were slashed. Five of the first six months of 2015 have seen year-over-year increases in job cuts, and the total number of layoffs announced this year is the highest in the first six months of any year since 2010.
"Overall, we expect the pace of downsizing to slow in the final six months of 2015," Challenger said. "The factors that were contributing to increased cuts in the first half of the year appear to be subsiding."
Layoffs have been most prominently felt in Texas (a major oil-producing state), where nearly 74,000 positions have been slashed so far this year. Minnesota (25,616), New York (24,967) and California (22,036) also saw significant losses.
Inclement weather, a strong dollar, sluggish wage increases and a West Coast port strike were among a host of contributing factors that dragged on the economy in the first half of the year. Consumer spending was notably weak, which seems to have contributed to retail sector job cuts. More than 45,000 domestic retail positions have been slashed so far this year, up 68 percent from this time last year.
"Retailers should be enjoying the benefits of falling oil prices, as consumers have the money they are saving at the gas pump to spend elsewhere. However, it appears that consumers were hoarding that cash, at least through the first half of the year," Challenger said. "With consumers starting to spend more, we should see job cuts in retail start to decline in the second half of the year."
American consumers' personal consumption expenditures shot up 0.9 percent in May, marking the largest monthly increase in spending since August 2009, according to a report released last week by the Census Bureau.
Disposable personal income also ballooned 0.5 percent month over month, as slow but steady wage increases are starting to encourage consumers to loosen their purse strings. And in a primarily consumer-driven economy, a little splurging here and there can go a long way.
"May spending surged relative to the lackluster pace over the first couple of months of the year," Lindsey Piegza, chief economist at investment banking firm Stifel, wrote in a research note last week, noting that the month's data painted "a much more favorable picture of the U.S. consumer."
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