Consumer sectors typically lead the recovery from economic downturns, followed closely by the information technology sector. The coronavirus recession, though dissimilar to previous recessions in many ways, appears to be trending similarly. The leisure and hospitality, public and private education, and professional and business services sectors are driving labor market improvements and providing the strongest indication that the economy is finally turning around.
According to the Bureau of Labor Statistics' (BLS) June jobs report, the US economy added 850,000 jobs in June, far surpassing the forecast 706,000 and representing the most substantial monthly job creation in the past 10 months. Additionally, average hourly earnings (i.e., wages) rose 0.3% during the same period and 3.6% year over year, displaying similarly strong improvements that exceeded economist expectations.
Leisure and Hospitality
Job additions in the leisure and hospitality sector totaled 343,000 in June. Standout employers within the sector include food services and drinking places, which added 194,000 jobs; accommodation, which added 75,000 jobs; and arts, entertainment and recreation, which added 74,000 jobs. "Pandemic-related restrictions continued to ease in some parts of the country," said the BLS, driving the growth trend.
Public and Private Education
The public and private education sector created 269,000 jobs in June, nearly rivaling the leisure and hospitality sector growth. This sector includes local government education, which was responsible for 155,000 additional jobs; state government education, which added 75,000 jobs; and private education, with 39,000 jobs. The BLS cited "staffing fluctuations due to the pandemic [and] the return to in-person learning" as primary contributors to the expansion, which strays from historical seasonal trends.
Professional and Business Services
The professional and business services sector claimed the third-highest number of new jobs in June at 72,000. Of these, temporary help services accounted for 33,000 jobs; advertising and related services accounted for 8,000 jobs; scientific research and development services accounted for 7,000 jobs; and legal services established an additional 6,000 jobs. These increases are reflective of improving economic sentiment and strengthening business activity.
- Supply constraints in labor markets are finally easing as more workers respond to higher pay; after increasing by 20 cents in April and 13 cents in May, average hourly earnings increased another 10 cents in June, bringing the benchmark to $30.40 per hour. With wage increases fueling higher employment, labor shortages are becoming less of a threat.
- Low-wage service sectors are steadily rebounding, allowing the manufacturing, transportation and warehousing sectors to take a backseat in the economic recovery amidst extended material shortages. Service prices are more dependent on trends in employment and labor rates than product prices; as supply chain disruptions maintain elevated and unstable product prices, buyers may find more favorable conditions in service markets.
By: Ayanna Leaphart
Sign up to our newsletter
Labor Shortage News for 5 Key Markets
Labor shortages are spreading across the economy, driving salaries upward and inflating end prices for many goods and services. Read up on five markets that are currently being impacted and unpack the effects on the Call Center Services market with one of our analysts.
Halftime Report: 5 Procurement Trends in the Second Half of 2021
Procurement departments and buyers that embrace proactive spending strategies are better equipped to reinforce supply chain resiliency in their organizations.
Chinese Telecom Equipment Vendors Face Trouble in the United States
Procurement professionals should examine the increasing risks when sourcing telecom equipment and services from Chinese companies, including regulatory compliance risks, intellectual property infringement, quality failures and political risks.