Why American firms are on a hiring spree?

The U.S. created 222,000 new jobs in June this year as hiring accelerated in the spring, showing that companies are still finding ways to add staff despite a growing shortage of skilled workers, said a marketwatch.com report. The increase in new jobs was the largest in four months and second biggest haul of the year, while the hiring was also stronger in May and April than previously reported. The upward tick in hiring in the spring coincides with a fresh spurt of growth in the economy after a slow start to the year. The U.S. is forecast to grow twice as fast in the second quarter as it did in the first three months of the year, noted the report. Gus Faucher, Chief Economist at PNC Financial Services told the portal, “The job market remains in good shape eight years into the economic expansion.” Click here

Unemployment 

The unemployment rate surged to 4.4% from 4.3% as more people entered the labour force in search of work. The jobless rate had fallen to a 16-year low in May. The ongoing improvement in the labour market is under scrutiny from a Federal Reserve that’s likely to view the strong June report as another call to action. The Central Bank has been raising interest rates gradually and withdrawing stimulus to ensure the economy does not overheat, the report pointed out.

The Fed sees steady employment gains as further proof the economy has mostly healed from the Great Recession. They worry low unemployment could trigger a surge in worker play that re-ignites inflation. As the economy enters its ninth year of expansion, however, there’s no sign of runaway wages. Hourly pay was up from 0.2% to $26.25 an hour in June. Wages have advanced a modest 2.5% in the past one year, up slightly from the prior month but still well below the usual gains at this late stage of an expansion. Companies continue to find ways to restrain labour costs, the report said.

Mild wage growth

Economists had offered a slew of explanations for mild wage growth, such as low productivity, global competition, fewer middle-class jobs or a shift to a younger, lower-paid workforce from an older, higher-paid one.

 

 

Hiring segments

In June, health care firms hired 37,000 workers. Doctor offices and hospitals have been adding employees for years to care for an aging population and to handle changes brought about by the Obamacare, noted the report. White-collar businesses also created 35,000 new jobs in what’s been another area of strong employment growth. Restaurants padded payrolls by 29,000 in June and financial firms including banks and insurers added 29,000 more employees. Retailers under siege from online sellers found some respite, adding workers for the first time in five months the report said. Top Mba Colleges in Mumbai.

Employment in manufacturing was basically flat, however. Heavy industry has only added 53,000 jobs this year despite an economic upsurge. “The manufacturing jobs recovery isn’t happening,” quoting Jed Kolko, chief economist of the job-listing website Indeed, the report said.

The government also raised its estimate of new jobs created in May to 152,000 from 138,000. April’s gain was increased to 207,000 from 174,000. Under the Trump administration, employment has increased by an average of 173,000 jobs a month compared to 187,000 in the final year of the Obama White House, the report added.