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6 questions about the job market

By Mark Hamrick ·
Tuesday, July 1, 2014
Posted: 6 am ET

The Labor Department releases its monthly jobs report on Thursday. The employment reading is typically released on a Friday, but the numbers from June are being rolled out a day early because of the Independence Day federal holiday. Will the report lead into the Fourth of July weekend with a bang or be more of a misfire? Here are some things to watch for:

1. So-so hiring?

Analysts, on average, expect the government to say employers added about 210,000 jobs added to payrolls in June.  That's above the monthly average of 197,000 jobs added over the past year, but below reported payrolls growth of 217,000 jobs for May.  Economists expect the unemployment rate will remain unchanged at 6.3 percent.

© Kzenon/

2. More holdover clouds from winter?

The recent downward revision in the nation's gross domestic product put growth, or the lack of it, at a negative 2.9 percent in the first quarter. "The winter weather and then the rebound from the winter weather is kind of distorting a lot of things, but there is a bit of a puzzle between the pace of jobs growth and what we are seeing in GDP," says Paul Edelstein, Director of Financial Economics for IHS.

3. Job seekers getting back in the game?

The share of people who were either working or looking for work -- so-called labor force participation -- was reported unchanged month-over-month at 62.8 percent in May. The size of the workforce has been in a slow downward trend for years.  Gus Faucher, economist with PNC Financial Services Group, thinks more people will search for work if the job market continues to firm. "I do think that the unemployment rate is going to fall, but it is only going to fall slowly over the rest of this year as we continue to see labor force participation rate rebound slowly," says Faucher.

4. Manufacturing going strong?

The Labor Department says manufacturing has added more than 100,000 jobs over the past year. Technology improvements have been the proverbial double-edged sword for manufacturing and the economy in general. "Technology might be slowing the need for adding workers to some degree," says Chad Moutray, the chief economist for the National Association of Manufacturers. But he adds: "Productivity gains have also made U.S. manufacturing more attractive in terms of relative labor costs."  Weak economies overseas have hindered demand for U.S. exports.

5. More money for workers?

Watch for a further increase in average hourly earnings, which have risen 2.1 percent over the past year. There is a lag between a tightening job market and income gains, says Alan MacEachin, corporate economist for Navy Federal Credit Union. He thinks wage growth will also outpace inflation toward the end of this year and in 2015. That would be good news for American workers who haven't seen much improvement in pay in recent years.

6. Some jobs going begging?

MacEachin notes that labor shortages are already being seen in the construction industry, something the Federal Reserve's Beige Book economic survey has also pointed out over the past year. A recent report from ManpowerGroup said skilled trades positions were the most difficult to fill. After that, restaurant/hotel positions came in second on the talent shortage list, followed by sales jobs, teachers, drivers, and then accounting/finance posts.


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