NEWS RELEASE
CORESTAFF COMMENTARY:
REBOUNDING OR RECOILING? MANAGING EXPECTATIONS
By Steven Drexel,
CORESTAFF president and chief executive officer
This article is among a series of commentaries written by Steven Drexel discussing
key issues and trends affecting today's labor market. Drexel is a member of the Bureau
of Labor Statistics' Business Research Advisory Council. An archive of past commentaries
may be found at www.corestaff.com/press. Please attribute information to Steven Drexel,
president and chief executive officer of CORESTAFF Services if you adapt all or part of
this piece for articles. If you are interested in connecting with Drexel or receiving more
information about CORESTAFF, please contact Sally A. DeVito Jozwiak at 713-438-1567 or
sally.jozwiak@corestaff.com.
Below, you will find Drexel's remarks on:
- Current economic conditions and the impact on jobs
- Positive indicators outweighing the negative indicators
- Optimism versus apprehension
August 2004 - The economy slowed during the second quarter -- particularly during June. The Commerce Department reported that the current estimate for second quarter 2004 growth in the Gross Domestic Product is now 3.0 percent, down from the very strong 4.5 percent growth rate recorded for the first quarter. June’s consumer spending data, industrial production, retail sales, and housing starts all pointed to slower activity during the month and quarter. The biggest drag during the period was likely the rising energy prices, which eroded consumer’s purchasing power.
Fortunately, most analysts, and notably the Federal Reserve, remain confident that the second half of the year will see a return back to above long-term trend growth rates. Already, indications for July’s activity suggest a rebound. Consumer confidence as measured by the Conference Board and the University of Michigan was up in July. Orders for durable goods improved, breaking a two-month slide. The Institute for Supply Management’s manufacturing index for July grew above already strong levels. The Federal Reserve’s “beige book” was also generally encouraging regarding recent activity at the Fed’s district level. And there were signs that business and consumer spending improved as well.
How about the labor markets? Certainly the employment report due out on Friday will go a long way toward confirming or refuting the optimism regarding the second half of the year. June’s reported growth of 112,000 jobs was disappointing compared to the expectation and the previous few months’ results. July’s job growth should bounce back based on an overwhelmingly positive array of secondary indicators. Some of the improving secondary indicators include initial claims for unemployment, unemployment duration, layoff trends and the ratio of respondents indicating jobs hard to get versus jobs plentiful. Finally, private surveys of hiring intentions indicate a brighter near-term outlook.
What’s the bottom line? The second quarter slowdown was likely the result of technical, rather than fundamental, factors. Look for a resumption of strong growth during the second half of the year, but be concerned if, over the next few months, employment does not pick up or energy prices don’t moderate.
Additional Observations:
- June Unemployment Number –
It will remain at 5.6 percent.
The trends point to a gradually improving unemployment picture. Given that employment growth was muted in June, even if July’s growth is stronger, I expect it will take another month to move the unemployment rate.
- Iraq and its effect on confidence.
The events in Iraq are unsettling in terms of the energy picture and the uncertainty around the U.S. presidential elections.
About CORESTAFF Services
CORESTAFF Services is one of the largest national staffing firms in America, with offices in 19 states. CORESTAFF also operates as
TeleSec CORESTAFF in the Washington, DC area and Leafstone Staffing Services in the New York City and northern New Jersey metropolitan
areas and southern Connecticut. CORESTAFF is not affiliated with Core Staffing Services, Inc. which operates in the New York Metro
Area. CORESTAFF is headquartered in Houston, Texas; 713-438-1400.
Visit CORESTAFF Services on the Web at: www.corestaff.com, www.it.corestaff.com,
www.careertrust.com, www.techresources.coretaff.com, www.infocurrent.com
and www.employmentzone.org.
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