With the jobs report for this past month coming up quick, experts have started to predict what the report will look like. It seems as though the job market has slowed down a bit lately and the growth we started to build is coming to a stand still. Specifically, applications for unemployment benefits increased, hiring slowed significantly and lay-offs hit an eight-month high.
It’s difficult to face the facts, but it seems as though our recession-recovery has come to a bit of a bump in the road. Although the Bureau of Labor and Statistics has not yet released their jobs report, other reports show a dismal outlook of this past month. ADP’s report (ADP is a payroll processing company) shows that businesses added just 133,000 jobs this May. That number is higher than April’s, which marked the addition of only 113,000 jobs, but it is still well below the predicted numbers.
Many experts blame the unseasonal warm winter we experienced for the jobs gains we saw a few months ago. That may be true, but it does little to explain why the jobs gain has slowed and even stalled in recent months. Diane Swonk, chief economist at Mesirow Financial, was quoted saying, “The labor market has slowed in recent months, in a way that goes beyond simple payback for unusually mild winter weather. Moreover, the risk is high that the labor market will remain weak over the summer months as uncertainty over Europe and our own ‘fiscal cliff’ build.”
That doesn’t sound too great for us, but what is the ‘fiscal cliff?’ If you haven’t yet heard of it, the fiscal cliff is a term used to refer to the end of the year when the Bush tax cuts, the extended unemployment benefits and the payroll tax cuts all expire. At the same time, the government is expect to cut more spending. According to the Congressional Budget Office, the expiration of these cuts could take hundreds of billions of dollars out of our economy and throw us back into a recession again.
It’s likely that this uncertainty about our economy and our market is why employers are hesitant to employ new candidates with gusto. If you were an employer would you feel comfortable hiring more employees in the current economic climate? The answer is likely no. Perhaps that is why employers are even taking measures to ensure they don’t find themselves in a peculiar, bad situation when this possible recession does roll around. Reports show that employers cut 62,000 jobs in May. That is the highest number we have seen since September.
We’ll have to see what the BLS jobs report has to show for this past month, but if these other reports are anywhere near the truth, then it’s likely the report will be nothing more than weak.