Fluctuations in the Job Sector
The job market is currently experiencing instability in terms of growth. New job opportunities have been emerging steadily over the past few years. However, the rate of growth is inconsistent and hard to predict.
Projections in June 2019 indicated that the job market would witness the creation of around 140,000 new jobs, as per ADP estimates. Ultimately, only about 102,000 new jobs were added. While this is still a significant number, falling short by 38,000 from the initial forecast raises concerns.
Economists observed that larger companies and corporations contributed to the job market by adding approximately 65,000 new positions. On the other hand, smaller businesses experienced a decline, losing around 23,000 jobs. Breaking it down further, the education and healthcare sectors saw an increase of 55,000 jobs, while professional and business services gained 32,000 jobs; however, the construction industry witnessed a loss of 18,000 jobs.
USA ADP employment report announcement – Actual: 102.0k, Expected: 140k pic.twitter.com/3dD3W9uEu9
— Spreadex (@spreadexfins) July 3, 2019
Two primary factors contributed to this scenario. Firstly, trade uncertainty stemming from disputes between China and the US caused businesses to adopt a cautious approach, affecting growth prospects. Secondly, the impact of tax cuts waned over time. While the tax cuts implemented in 2018 initially drove growth, their effects diminished by late 2019.
Ian Shepherdson, the chief economist at Pantheon Macroeconomics, elucidated the situation, stating, “The bigger picture here is that payroll growth had to slow this year because the economy is no longer being boosted by last year’s tax cuts. But the key private sector survey measures of hiring, notably the ISM surveys and the NFIB survey, have substantially recovered.”
