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July 1, 2014 / Toby Dayton

Net Gain Of 195,000 Jobs In June Will Disappoint On Thursday But Job Gains In Q2 Still Solid; July Job Gains Will Start Q3 On Sour Note

After last month’s pretty horrific miss in our forecast, I’ll err on the side of keeping this month’s forecast commentary to a minimum. But one of the things we’ve started doing each month in our jobs forecast webinar is giving our prior month’s forecast a grade, so I’ll do the same here (which is particularly painful when the grade is an F).

Last month, with a healthy dose of trepidation and much anxiety (obviously well-founded), we forecast net job gains of 350,000. The BLS reported last month that the U.S. economy added a net gain of 217,000 – a decline of 65,000 from the gain reported the prior month. Despite the fact that the BLS could end up revising its numbers for May in the next 30 and/or 60 days, we have to give ourselves a grade of an F at this point. So for the year, our forecast grades are as follows:

Grade through May

With the solid performance in February and April, I’d still say we’re at a B for the year, but we’ll see how things progress.

In any event, the pendulum has swung quite a bit the other way with our jobs opening data and things are looking decidedly more bleak these days as we assess what’s going on in the labor market. In May, the blended average of new job openings in our job search engine (which lists 2.2 million jobs indexed directly from 50,000 company websites) fell 5.5%, while the blended average of total openings rose just .3%. In our forecasting model, we take a blended 50/50 mix of the new and total job openings in the prior month to predict net job gains in the current month, relative to the net gain in the prior month. So for June, the -2.6% blended decline in new and total job openings gives us a forecast of a net gain of only 195,000 jobs in June, down from the 217,000 added to the U.S. economy in May.

June 2014 jobs forecast

Unfortunately, our job openings data didn’t get any better in June. Looking at the data by state, new jobs in our search engine fell 5% in June, while total job openings rose just 1%.

Jobs by State June 2014

Looking at job listings by category, the data is exactly the same, with new job openings falling 5% and total job openings climbing just 1%.

Jobs by Category June 2014

Based on our tepid data in June, our preliminary outlook for job growth in July is not encouraging. It’s important to keep in mind, however, that we’ll get another set of data points for June when we compare July to June at the end of July, and the picture could change to some degree. But our initial assessment, at this point, is that net job gains in July will be disappointing.

If there is a positive spin to put on our assessment of the labor market, I’d say it is worth pointing out that even with the distinct possibility of a weak number on Thursday, the total jobs gained in the 2nd quarter should end up being the highest in any of the previous 13 quarters. Q2 should also break this horrible streak we’ve been on since 2011 in which the job gains in the 1st quarter of each of the past 3 years (with single exception in Q4 2011) were not exceeded in any subsequent quarter during that year (and Q4 ’11 just barely beat Q1 ’11).

jobs by qtr thru june

So there’s a bit of good news to keep in mind as you’re eating your hot dog and watching fireworks on Friday.

Happy 4th of July.