The U.S. unemployment rate is at a 50-year low. Is it more likely to go even lower, or bottom out and begin to rise? With the economy growing at a weak 1.9% rate I think the answer is evident.
Where will new job growth come from?
Manufacturing? Banking? Healthcare? Retail? Technology? We have data that enables us to make educated guesses for each of these sectors of the economy. Let's look at the pictures, courtesy of Bob Dieli at NoSpinForecast.
Chart 1. Total Nonfarm Payroll Employment
In the above chart and all that follow, the blue bars represent the number of net new jobs for each month. The grey bars represent the net new jobs that were created in the year-ago month.
This is the "big picture" of employment trends, and it's open to interpretation by the viewer. My view is that employment growth is healthy but slowing as the months go by.
Chart 2. Leisure & Hospitality
Leisure & hospitality is 11% of the U.S. workforce. The numbers for this year look weak compared to last year.
Chart 3. Health Care
This looks like a strong segment of the economy. People need to see their doctor, no matter what else may be happening in their lives.
Chart 4. Retail Trade
Retail is the sad sack of employment. Negative numbers this year, and no relief on the horizon as far as I can see.
Chart 5. Manufacturing
Wait a second... where are all those high-paying manufacturing jobs we were promised in 2016? This segment of the labor force looks weak and getting weaker with each passing month.
What comes next
If you're an optimist, you probably think that employers will find ways to hire more workers to meet the demands of their expanding businesses. That could very well be the way things unfold in the months and years ahead. But how realistic is this point of view?
The economy is still growing but the pace of growth is now just 1.9%. That's barely fast enough to create new jobs. Stall speed is 1% growth. Is that where we're headed?
Watch for signs of further employment weakness
Here's a short list of companies that have announced layoffs in October. Nothing out of the ordinary, but watch for more announcements with bigger numbers. that could be a sign that things are headed south.
- Molson Coors (NYSE:TAP) - 500
- Humana (NYSE:HUM) - 800
- Juul (JUUL) - 500
- Ford (NYSE:F) - 450
- Zion's Bank - 5% of workforce
- Barney's NY - 300
- Houghton Mifflin (NASDAQ:HMHC) - 8% of Workforce
- Adient (NYSE:ADNT) - 1,300 Corp. Employees
- Wells Fargo Co. (NYSE:WFC) - 350
- Merck (NYSE:MRK) - 500
- WeWork (WE) - up to 2,000 Layoffs Possible
These numbers don't mean very much in a healthy economy, but when the economy is weak, as it is today - the numbers can begin to snowball. Watch for signs of more layoffs from high profile companies. It could be the canary in the coal mine.
Editor's Note: The summary bullets for this article were chosen by Seeking Alpha editors.