June Job Growth: The Services-Providing Sector Remains Secure
U.S. job growth remains stable, with 158,000 positions added to private sector employment in June. Although the goods-producing sectors were flat, the service-providing sectors demonstrated continued strength, according to the ADP National Employment Report®.
"The job market continues to power forward" says Mark Zandi, Chief Economist of Moody's Analytics. "At this pace, which is double the rate of labor force growth, the tight labor market will continue getting tighter," he says. Organizations should still be preparing for a shortage of talent.
The Service-Providing Sectors See Strong Growth
The service-providing sectors remain a sign of stability at the core of job growth. In the professional and business services industry, 69,000 jobs were added, representing 44 percent of total jobs added in the past month. With 22,000 of those roles added in management and professional/technical services, it's an indicator that well-compensated positions are being added to the economy at a high rate.
When compared to the 253,000 positions added in May, the 158,000 positions added in June may seem like a large drop. However, experts remain confident in the labor market's strength, especially when examined against patterns on a quarterly or yearly basis. "Abstracting from the monthly ups and downs, job growth remains a stalwart between 150,000 and 200,000," Zandi says. Additionally, according to the Bureau of Labor Statistics, the unemployment rate remained stable at 4.4 percent in June.
Midsized Businesses Contribute 58 Percent of Job Growth
For the second consecutive month, midsized businesses — those with 50-499 employees — saw the most job growth. Midsized businesses added 91,000 jobs in June, while small businesses added 17,000 jobs and large businesses added 50,000 jobs. In May, midsized businesses added 111,000 jobs, which may indicate that midsized organizations are thriving, despite increasing talent shortages.
Goods-Producing Sectors Stagnate for First Time This Year
May was a blistering month for the goods-producing sectors, which include the construction, mining and manufacturing industries. With 31,000 total positions added, construction firms alone were responsible for 23,000 of those jobs. This year has been optimistic for the goods-producing sectors, which haven't always added jobs at the same rate as services-providing sectors. This has spurred hope that the manufacturing and natural resources and mining industries could be experiencing a long-awaited recovery.
In June, however, the manufacturing industry added 6,000 jobs, while the construction industry lost 2,000 jobs and the natural resources and mining industry lost 4,000 jobs. But these numbers may not be a cause for concern. The slowdown in construction could be attributed to unusually warm weather during the first months of 2017, which led to earlier hiring for construction firms.
With jobs being added at a faster rate than talent entering the workforce, HR leaders shouldn't take a summer vacation from strengthening their HCM strategies.
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