US Economy Adds 236,000 Jobs in February
Promising news from the Labor Department this month, as the economy added 236,000 jobs in February, moving the unemployment rate down slightly to 7.7 percent. Particularly strong gains within manufacturing, construction and healthcare continue to drive the sustained job growth for the nation. Employment in professional and business services added 73,000 in February, with employment in administrative and support services contributing 44,000 jobs. Accounting and bookkeeping services added 11,000 jobs, and employment in construction increased by 48,000. The healthcare industry further grew last month by adding 32,000 jobs, primarily within ambulatory healthcare services (+14,000) and nursing and residential care facilities (+9,000).
This month’s report highlights the relative resiliency of the labor market, with modest growth levels, despite the tax increases and the $85 billion federal spending cuts that took effect March 1st. In its February jobs report, payroll processor ADP showed small and midsize businesses are accounting for much of the nation’s job gains for the second consecutive month in 2013, adding 77,000 and 65,000 respectively.
Two Strong Index Readings for Manufacturing, Service Activity
Two reports out last month by the Institute for Supply Management (ISM) indicate strong expansion within U.S. service companies and in the manufacturing sector. The ISM service index rose to its highest reading in 12 months to 56 percent from 55.2 percent in January, marking the 39th consecutive month of growth and illustrating solid progress in industries like retail and in the restaurant business. The non-manufacturing segment of the economy employs 86 percent of American workers.
The report came on the heels of an equally strong ISM report on U.S. manufacturing. The manufacturing index climbed 1.1 points to 54.2 percent in February – its highest level in almost two years. The cumulative findings of the two reports further suggest the economy has fared well thus far in the face of increased payroll taxes, rising gasoline prices and the federal spending cuts.
Consumer Confidence and Spending
Consumer spending, which accounts for 70 percent of the economy, advanced a seasonally-adjusted 0.2 percent last month, according to the Commerce Department. The finding indicates Americans appear to be cautiously spending despite an increase in their taxes and a decline in income levels in January.
However, some analysts note that consumers don’t always change their spending behavior immediately following a tax increase, and that we may see some downward pressure on the economy in the months ahead. Another consumer confidence report issued by The Conference Board showed rebounding confidence levels in the short-term economic outlook and in labor market expectations.
Recent findings from the February Randstad Employee Confidence Index also illustrate a slight improvement in employee confidence levels, rising 1.4 points to 53.5. The Index also revealed 30 percent of workers believe the economy is strengthening and nearly a quarter say more jobs are available. Again, despite this welcoming news, there will likely be some pull back in spending habits and confidence over the coming months as workers adjust to the payroll tax increase and higher gas prices.
On the other hand, the Randstad Employee Confidence Index has consistently shown employed workers have been and will likely continue to keep their eyes open for new job opportunities. In fact, this indicator has never fallen below 31 percent in the last eight years of conducting the survey despite macroeconomic ups and downs.
Temporary Sector Poised for Future Growth
Data released last month by the American Staffing Association indicates an increasing number of temporary and contract workers in the marketplace. U.S. staffing companies employed an average of 2.9 million temporary and contract workers per day in 2012, up 4.1 percent from 2011. This amounts to 11.5 million temporary and contract employees over the course of the year.
Projections for the staffing industry remain strong from both a supply and demand perspective. Staffing Industry Analysts President Barry Asin projects staffing industry revenue will hit $160 billion in 2018, up from $126.8 billion in 2012. Among his other projections in total talent management, the overall management of a workforce both traditionally hired and contingent will be ever present by the end of this year. The Randstad Workforce360 Study supports this outlook, finding 73 percent of companies are committed to building a variable workforce and 18 percent are more committed compared to the start of the recession in 2008.
He also foresees a boom for the staffing industry courtesy of the Affordable Care Act, which will likely see a growth in the number of workers choosing temporary or contract careers. In fact, the Randstad Workforce360 Study found that 33 percent of all workers would be more likely to continue or consider a career as a temporary or contractor if affordable health insurance options are available to them as a result of healthcare reform.