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2 min read
Nicholas Garbis
On July 28, 2020, Nicholas Garbis of One Model and Cary Sparrow of Greenwich.HR delivered a press conference from the floor of the old Minneapolis Grain Exchange to discuss emerging trends in the US labor markets based on daily job posting data in the Covid Job Impacts website. Below is an excerpt of some of the main points, followed by a link to the video of the event. "Next Friday, August 7th, the Bureau of Labor Statistics will release the July jobs report. (Link to latest release here.) While there’s an ongoing debate regarding what will be in the July report, our recent analysis demonstrates that despite the dramatic increases in Covid-19 infections in many states over the month of July, the positive trends in the job market in many industries have continued through today. As a quick summary: The June jobs report was quite positive -- with a gain of 4.8 million jobs driven by big gains in Retail and Hospitality, the unemployment rate dropped 2.2% to 11.1%. Moving into July, the same two industries continued their upward trend -- and they were joined by others: Healthcare, Wholesale, and Construction. Our projection is that next week’s jobs report will be very strong -- much stronger than what you might expect given the gloom and doom in the news. Getting more specific, we project an increase in employment of about 6.0 million, which will drop the unemployment rate to around 9%, possibly below 9%. While we are optimistic for the July numbers, we are very cautious about what will happen in August. There is certainly continued momentum, but a change in state policies could easily reverse the gains." Cary and Nicholas proceeded to highlight various industries' results and then answer questions from the online audience. Be sure to sign up for our One Model blog and follow us on LinkedIn to learn about the next Labor Markets Press Conference!
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Featured
10 min read
Nicholas Garbis
SUMMARY: June was great at 4.8 million new jobs. July will be over 6 million. The June 2020 employment report from the Bureau of Labor of Statistics showed an increase of 4.8 million jobs. It was welcomed as good news, but asterisks were quickly added based on the recently surging Covid infection numbers. July, it is feared, will shown softening in the market. Contrary to many, our data indicates that July jobs report will be better than June, likely exceeding 6 million new jobs. Our analysis is based on the positive signs we have been tracking in the Hospitality and Retail industries over the past several weeks through our Covid Job Impacts site, where we show new job postings on a daily basis by industry, state, and job family. Within the site’s commentary we have been commenting on the progress in these two industries specifically over the past several weeks. The BLS highlighted Hospitality and Retail in their June comments. These industries made up ~60% of the new jobs (2.8 million of the 4.8 million) while they make up ~20% of the total employment. Both were severely impacted in the early stages of the pandemic downturn and are now working their way back toward normal staffing activities. We see Hospitality and Retail combining to create over 4 million new jobs in July, as their job listing activity continues to surge. Most other industries are also showing increased hiring activity, so we estimate they will contribute another 2 million jobs. The August jobs numbers are a bit more difficult to estimate at this point. As states pause and reverse their opening plans, market uncertainties will drive job listings downward though to what extent and how quickly. At the early stages of the pandemic, companies’ reaction times were a bit slower. Perhaps now they have built up more rapid reflexes. Job Listings as a Leading Indicator A company’s decision to advertise a job opening is a clear indicator of their business outlook. If they were not confident at some level, they would delay or cancel the decision to hire. This is true for new, growth hiring as well as backfilling of current positions vacated by resignations or illness. The aggregate of these decisions to hire, as seen in the new job listings data on our Covid Job Impacts site, is therefore a clear and leading indicator for the economy overall. The site provides views of new job postings by industry, state, and job family, indexed to the job listing levels of March 1st, providing a high-resolution lens on the impacts of Covid-19 on the labor market and overall economy. Some views of the Covid Job Impacts site are below as reference: Fig. 1: Overall view of new job listings across all US industries. (Source: Covid Job Impacts site from Greenwich.hr/One Model, data through July 1, 2020) Fig. 2: Industry view of new job listings across all US industries. (Source: Covid Job Impacts site from Greenwich.hr/One Model, data through July 1, 2020) Trends in Hospitality and Retail industries New job listings in Hospitality hit a low in mid-April at around -80% verus March 1st , and have been on a steady path upward since. This is big progress, albeit far below pre-pandemic levels and still around -45% off versus March 1st. In Retail, the drop was also significant in March, regaining some ground in April and May, then demonstrating strength in June. It is the only industry that, even if for just a moment, has crossed into the positive terrain, exceeding the new job postings figures from March 1st on June 21. Fig. 3: Hospitality and Retail industry trends show continuing improvement. (Source: Covid Job Impacts site from Greenwich.hr/One Model, data through July 1, 2020) BLS summary of Hospitality and Retail in June In the June BLS report, Hospitality and Retail combined to create 2.84 million of the 4.8 million increase in employment. This is roughly 60% of the added jobs coming from two industry sectors that comprise about 20% of the workforce (roughly 10% each). From the June BLS report: Estimating the July Figures for Hospitality and Retail Emerging alongside this good news from BLS are escalating concerns regarding the employment impacts of states’ policy responses to recently increasing infection rates. These actions will certainly have a downward pressure on job creation across industries, Hospitality and Retail notwithstanding. However, the trend data for new job listings for Hospitality and Retail indicates that they will further increase employment in the month of July, at least during the period which will be covered in the next BLS report (which for a single week, generally the week including 12th day of the month). To demonstrate this, we are showing the Hospitality and Retail industry job listing trends along with timing windows to support our estimates for the July report. Fig. 4: View of Hospitality and Retail industries and June BLS reporting week. (Source: Covid Job Impacts site from Greenwich.hr/One Model, data through July 1, 2020) The very positive results from this particular week in June (Fig. 4) would not be from new job listings within that specific week, since job listings take some time to fill and for a new hire to begin working (and therefore be captured in the BLS data). While higher paying jobs can require a few months or more to fill, the jobs in Hospitality and Retail that were so significant in the June the report are relatively lower paying, so we would expect that they are requiring only a few weeks to fill. We have added a box to indicate the period of job listing activity that we assume to comprise most of the new jobs in the June report (Fig. 5, Box A). Fig. 5: Hospitality and Retail industries, with Box A indicating period aligned to June BLS data. (Source: Covid Job Impacts site from Greenwich.hr/One Model, data through July 1, 2020) Looking at a similar time window of job listing activity that will correspond to the employment levels on July 12th (Fig. 6, Box B) provides two key observations: the job listings that will be related to new jobs in that week have, for the most part, already been created, and many of them filled; and the volume of job listings in the time period that will be reflected in the July report are considerably higher than the levels that drove the very large job numbers in the June report. Fig. 6: Hospitality and Retail industries, with Box B indicating period aligned to July BLS data. (Source: Covid Job Impacts site from Greenwich.hr/One Model, data through July 1, 2020) Our estimate of 4 million jobs in Hospitality and Retail in the July BLS report is based on the analysis of the job listing volumes in these two industries, focusing on Box A (June report) versus Box B (July report). We can see far greater volumes in the later period. Where Hospitality gained 2.1 million new jobs in June based on the period in Box A, we estimate that the new figures will be around 3 million. Similarly, where Retail created 740,000 new jobs in June, the increased job listings figures in Box B versus Box A lead us to estimate that this industry will create over 1 million new jobs in the July report. Fig. 7: Hospitality and Retail industries, with average lines inserted in Boxes A and B. (Source: Covid Job Impacts site from Greenwich.hr/One Model, data through July 1, 2020) The next few weeks will be critical to watch As state policies regarding Covid-19 are adjusted over the next couple of weeks, we will be closely watching the changes in businesses’ hiring plans as seen through their job listing activities. A closer look at state-by-state results on the Covid Job Impacts site will provide a leading indicator and a way to gauge the August BLS report well before it arrives. About One Model, Inc. One Model delivers a comprehensive people analytics platform to business and HR leaders that integrates data from any HR technology solution with financial and operational data to deliver metrics, storyboard visuals, and advanced analytics through a proprietary AI and machine learning model builder. People data presents unique and complex challenges which the One Model platform simplifies to enable faster, better, evidence-based workforce decisions. Learn more at www.onemodel.co
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Featured
5 min read
Nicholas Garbis
Two weeks ago, we released a new publicly available Covid Job Impact website to share daily data and insights on US job listings by industry, job family/role, and region/state. As we are looking at this data each day, we have watched some hopeful signs of recovery slipping away over the past week. This observation arrives on the same day that news reports are calling out reductions in the unemployment rate (see Forbes, "The Headlines are Dead Wrong - Unemployment Dropped 16% to 21M"). The total number of people on unemployment insurance has fallen from 24.9M to 21.1M in the past week according to the US Dept. of Labor reporting. A chart of this data is include in our site. So it's true, but it's in the rear view mirror and we want to look through the windshield. For quick reference, our site tracks US job listings with all figures being indexed to March 1st (ie, March 1 = 0%). Since job listings are decisions by businesses to hire, we believe this is reflective of their prospective outlook. And since job listings precede actual hiring by ~3 months, we see this data as a leading indicator of unemployment. Slipping Away? While we saw job listings up through mid-March, they quickly tumbled by ~50%, then proceed to bounce around a bit until they seemed to be holding steady in mid-May at around -27%. But over the past week (the last several dots) things have slipped down below -43% (see image). Together, Apart, and Together Again Another trend we spotted early on was that all industries fell together in mid-March, then began to diverge as different industries returned to hiring at different rates. While all industries were still down below March 1 levels, the range was wide, with some around -20% and others closer to -50%. In the most recent week, however, we see them all bending down together again. We think this is signaling a negative business outlook across multiple industries. (See image below with the periods marked out.) School's Out for Summer? In the midst of this, we can also see that the Hospitality industry, which fell fastest and stayed down the longest, has started to creep back up a bit. It appears that the Hospitality industry is expressing some confidence, perhaps betting that families will begin travelling now that stay-at-home orders are being lifted and the school year is wrapping up. The exception, viewable on the site, is the state of Nevada which continues to show Hospitality job listings down around -95% compared to March 1st. So, Will Unemployment Continue to Improve? As we see unemployment insurance claims dropping a bit, we believe a good portion is people returning to work from temporary unemployment (furloughs, temporary layoffs). These 'hires' will not require job listings. (Some of this was discussed with our guest, former Chief Economist of GE and Deutsche Bank, Marco Annunziata on our recent webinar.) We believe the reduction in job listings is indicative of a broad-based decrease in the business outlook and that unemployment may drop a bit more as temporary layoffs/furloughs end, but will remain stubbornly high for at least the next couple of months. If job postings begin to bend upward again toward -25%, there would be good reason to anticipate some material decreases in the unemployment numbers. One thing for certain: we will be watching this play out daily on the site. Keep an eye out for additional insights on the Covid Job Impacts site: https://covidjobimpacts.greenwich.hr -ng About One Model One Model delivers a comprehensive people analytics platform to business and HR leaders that integrates data from any HR technology solution with financial and operational data to deliver metrics, storyboard visuals, and advanced analytics through a proprietary AI and machine learning model builder. People data presents unique and complex challenges which the One Model platform simplifies to enable faster, better, evidence-based workforce decisions. Learn more at www.onemodel.co or email us at info@onemodel.co
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