Initial previews of America’s job market indicate resurgence for workers, but economists remain wary. Jobless claims fell to their lowest point in three months last week, falling to 254,000 versus 270,000 the previous week. That is far below consensus expectations of flat jobless claims, as more Americans find new jobs and return to work.
At the same time, private payroll firm ADP reported that America’s private sector gained 156,000 jobs in April, with most of the gains coming from small businesses, which hired 93,000 employees in April. Large businesses trailed significantly, with just 24,000 new jobs added.
While manufacturing was the only industry to see a decline in jobs, with a loss of 13,000, construction job gains of 14,000 compensated for the loss, while professional and business services led with a gain of 27,000 jobs. Of industries seeing job growth, financial services trailed the rest, with just 4,000 jobs added.
Vice President and ADP Research institute chief Ahu Yildirmaz noted that small businesses remain the primary engine of America’s labor market, and the country’s economy as a whole. "Despite the softest overall monthly jobs added in three years, small businesses remained an engine for job growth in April,” he said, adding that this is largely thanks to the fact that macro headwinds do not impact small businesses as much as they do larger ones. “Smaller businesses are less susceptible to global conditions, such as low commodity prices and the strong dollar, which may have caused larger businesses to ease up on hiring.”
The decline in financial jobs is a continuing trend that has persisted since the Global Financial Crisis of 2007-2009, when many large investment banks shed jobs amidst a liquidity crisis and fears of spreading insolvency throughout the financial industry.
Since then, the financial industry has rapidly shrunk, with large investment banks in both America and abroad routinely shedding thousands of jobs as a cost-cutting measure. Many banks have said they are streamlining operations and looking for more efficient uses of human capital to offset declining profitability and weak demand.
Moody’s Analytics Chief Economist Mark Zandi warns that the job growth is a disappointment, as it represents a 24% decline in the growth rate from March. "The job market appears to have stumbled in April. Job growth noticeably slowed, with some weakness across most sectors. One month does not make a trend, but this bears close watching as the financial market turmoil earlier in the year may have done some damage to business hiring,” he said.
The data comes shortly after a report by Challenger, Gray, & Christmas, a human resources specialist firm, which saw America lose 38,536 jobs in June.
CEO John A. Challenger said job cuts may slow in future months on economic uncertainty, but that will also cause new job growth to slow as well. "We may continue to see low job cut totals throughout the remainder of 2016, as employers take a wait-and-see stance on workforce levels. Several uncertainties, including national elections, the recent Brexit, and global security and economic issues are giving employers pause when it comes to workforce decisions,” he said. "We are seeing it in layoff numbers, as well as the job creation numbers, which have been lackluster in recent months."