3 sources of potential labor-market improvement

CARY, N.C. – 

While still facing headwinds, recent information from the U.S. Department of Labor, the Conference Board and ManpowerGroup showed encouraging trends associated with jobs — a key indicator for potential dealership retail vehicle sales and finance company portfolio health.

Acknowledging on Labor Day that “this has been a year of extraordinary challenges for American workers,” U.S. Secretary of Labor Eugene Scalia went into this past holiday weekend giving upbeat details from the August Employment Situation Report.

“The report significantly beat expectations with the unemployment rate dropping to 8.4% even as more Americans entered the labor force,” Scalia said. “Unemployment fell across all demographics, and the 1.4 million jobs added showed increases across most industry sectors. This follows a string of other reports showing a strong recovery underway.”

Another of those potential recovery guideposts arrived this week courtesy of the ManpowerGroup Employment Outlook Survey, which showed employers in the U.S have improved hiring plans for the fourth quarter following the 10-year low reported in Q3.

The survey of more than 8,700 U.S. employers conducted in July indicated the most positive outlooks for the three months ahead are reported in leisure and hospitality, transportation and utilities as well as wholesale and retail trade. As lockdowns lift, ManpowerGroup said consumer spending is buoyed by employment benefits and people across the country leave their homes to begin to socialize and shop. 

Also according to the survey, employers in manufacturing report a 7-percentage point improvement as supply-chain bottlenecks ease and workplaces open.

However, ManpowerGroup found that businesses now anticipate a slower hiring levels than initially expected.

In April, 60% expected hiring levels to return by January, but that level now sits at just 25%, While 11% expect hiring to return by next July, 5% expect longer as 21% remain uncertain.

Furthermore, ManpowerGroup discovered the impact of the pandemic is transforming the way U.S employers plan to get work done for the long-term.

The survey showed 34% plan to offer remote work and flexible hours in the post-pandemic workplace with 8% planning to offer 100% remote work to employees.

“Though we still have a long way to go to recover from what started as a health crisis and has evolved to a social and economic crisis, it is encouraging to see optimistic outlooks in some of the industries most heavily impacted including leisure, retail and manufacturing,” ManpowerGroup North America president Becky Frankiewicz said in a news release.

“We also see employers recognize this recovery will take longer than they initially thought and many are adapting work models for the long term,” Frankiewicz continued. “This is accelerating a shift closer to what we know workers have wanted for some time; autonomy to choose how and where they get their work done, more learning on demand, and a focus on achieving a better blend of work and home.

“Now is the time for employers to offer targeted skills development and more flexible future-focused work options for those working remote and in the workplace,” she went on to say.

Whether working remotely from home, in an office setting or a factory floor, Curt Long sees the labor market still has notable challenges to overcome. The chief economist and vice president of research at the National Association of Federally-Insured Credit Unions  offered this assessment after reviewing the latest data from the Labor Department.

“The August employment was solid, with job gains meeting expectations, labor force participation growing and the unemployment rate declining,” Long said

“One glaring problem area was a big jump in workers suffering permanent job loss. That figure did not change in July, but increased by 530,000 in August,” he continued. “There are now 3.4 million such workers, which is halfway to the peak of the Great Recession.”

Finally, over at the Conference Board, higher than the upwardly revised July reading of 51.37. However, the index is down from 109.8 registered a year ago.

August’s increase was fueled by positive contributions from six of the eight components that experts use to form the Employment Trends Index. They leverage eight labor market indicators, saying that aggregating individual indicators into a composite index that filters out “noise” to show underlying trends more clearly.

The eight labor-market indicators aggregated into the Employment Trends Index include:

— Percentage of respondents who say they find “jobs hard to get” (The Conference Board Consumer Confidence Survey)

— Initial claims for unemployment insurance (U.S. Department of Labor)

— Percentage of firms with positions not able to fill right now (National Federation of Independent Business Research Foundation)

— Number of employees hired by the temporary-help industry (U.S. Bureau of Labor Statistics)

— Ratio of involuntarily part-time to all part-time workers (BLS)

— Job openings (BLS)

— Industrial production (Federal Reserve Board)

— Real manufacturing and trade sales (U.S. Bureau of Economic Analysis)

“Despite the rise in new COVID-19 cases at the beginning of the summer, job growth continues to gain momentum. The Employment Trends Index increased for the fourth consecutive month,” said Gad Levanon, head of the Conference Board Labor Markets Institute.

“Over the coming months, job growth will persist as industries impacted by social distancing such as travel, hotels, restaurants and personal care will continue to recover,” Levanon continued in a news release. “However, another wave of infections this fall would limit the expansion of the U.S. labor market.”

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