WEBVTT - DOL's Shierholz: Labor Market Fundamentals Still Strong (Audio)

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<v Speaker 1>Global business news twenty four hours a day at Bloomberg

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<v Speaker 1>This is a Bloomberg Business flash from Bloomberg World Handquarters.

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<v Speaker 1>I'm Charlie Pellet. Stocks are declining as the SMP five

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<v Speaker 1>one point six percent. I'm Charlie Pellot. That's a Bloomberg

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<v Speaker 1>business splash. You're listening to taking stock with Kathleen Hays

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<v Speaker 1>and pim Box on Bloomberg Radio. US companies slowing their

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<v Speaker 1>hiring in May to just thirty eight thousand jobs. The

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<v Speaker 1>unemployment rate, though it fell as many people dropped out

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<v Speaker 1>of the workforce. Here to tell us more about today's

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<v Speaker 1>report is Heidi Scherholtz, Labor Secretary. Tom Paris is chief

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<v Speaker 1>economist at the Department of Labor. Heidi, thank you very

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<v Speaker 1>much for being with us. Oh, thank you for having me. Now,

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<v Speaker 1>I want to give you first the opportunity to just

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<v Speaker 1>explain a little bit about your takeaways from this report,

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<v Speaker 1>and then I just want to ask you about job opening.

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<v Speaker 1>So go ahead, gotcha. So the number, when we saw

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<v Speaker 1>the numbers, they were below expectations. Um. But a key,

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<v Speaker 1>big chunk of what was of the softness in today's

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<v Speaker 1>numbers was the Verizon strikers who are out on strike.

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<v Speaker 1>The good news on that is that those workers are

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<v Speaker 1>now back on the job. Um. If you add those

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<v Speaker 1>Verizon strikers to the thirty eight thousand jobs we get,

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<v Speaker 1>you're into this. You're into sort of the seventy seventy

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<v Speaker 1>five thousand range that and sort of. So if that's

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<v Speaker 1>more the underlying job growth that we saw in May

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<v Speaker 1>It's still pretty weak, isn't it. Because we were averaging

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<v Speaker 1>we were averaging two hundred thousand plus. Then we ranched

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<v Speaker 1>it down about a hundred and sixty net new jobs,

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<v Speaker 1>and to suddenly dive down to seventy thousand and change

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<v Speaker 1>is quite a pullback hiding. And of course there were

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<v Speaker 1>other signs of weakness. That unemployment rate fell because so

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<v Speaker 1>many people left the labor force. He said, Typically the

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<v Speaker 1>kinds of things you see when the labor market is

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<v Speaker 1>getting weaker, not stronger. What do you think is going on?

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<v Speaker 1>So one thing to always keep in mind is that

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<v Speaker 1>these numbers are really volatile months to months. So anytime

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<v Speaker 1>of the week month we don't get too upset, and

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<v Speaker 1>time there's a really strong month, we don't get too

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<v Speaker 1>giddy about it. If you look over the last three months,

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<v Speaker 1>it's a much more stable measure. That, though, is still

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<v Speaker 1>lower than what we've been seeing. So if you look

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<v Speaker 1>at job growth over the last three months is a

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<v Speaker 1>hundred and sixteen thousand, that's lower than the rates we

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<v Speaker 1>were seeing in two fifteen UM. One point on that, though,

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<v Speaker 1>is that as the labor market tightens, those are the

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<v Speaker 1>kinds of numbers we may expect to see going forward.

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<v Speaker 1>It's sort of as you get close. We're not there yet,

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<v Speaker 1>but as you get closer to have a really tight

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<v Speaker 1>labor market, you're just gonna see the job growth slow

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<v Speaker 1>a little. One of the things that helps to to

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<v Speaker 1>or sort of comes along with that, is that we

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<v Speaker 1>will also start seeing faster wage growth, and we did

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<v Speaker 1>see stronger wage growth so far this year. We're seeing

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<v Speaker 1>an annualized rate of wage growth at three point two percent.

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<v Speaker 1>So what's going on right now is not completely unexpected,

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<v Speaker 1>but we do where we will be looking to next

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<v Speaker 1>month to see into definitely monitoring the situation to see

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<v Speaker 1>if we're if we see that UM rebound next month,

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<v Speaker 1>I do you know, I don't want to put lipstick

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<v Speaker 1>on a pig here, But looking at the job's openings

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<v Speaker 1>report from last month five point eight million job openings

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<v Speaker 1>as of the last business day of March. That's from

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<v Speaker 1>the Bureau of Labor Statistics, is it possible that the

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<v Speaker 1>statistics that we're talking about today matter slightly less because

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<v Speaker 1>there is a job's mismatch that is only being intensified

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<v Speaker 1>because all those people that have the skills that are

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<v Speaker 1>wanted by employers already have jobs or job offers, so

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<v Speaker 1>the job One of the things that job openings numbers

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<v Speaker 1>highlight is a great deal of churn that goes on

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<v Speaker 1>in any labor market. So there were also I'm not

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<v Speaker 1>going to get this number exact, but I think there

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<v Speaker 1>were about five point five million hires in the in

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<v Speaker 1>March five point three. There you got, Okay, So the

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<v Speaker 1>so the most of those job openings get filled every

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<v Speaker 1>month because you just have a lot of you just

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<v Speaker 1>there's just a sort of, um perhaps surprising amount of

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<v Speaker 1>turn in the labor market. But one thing that I

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<v Speaker 1>do think those strong job openings numbers point to is

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<v Speaker 1>that the softer jobs numbers we UH saw today are

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<v Speaker 1>happening in this context of a lot of other economic

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<v Speaker 1>indicators that are much stronger. So the jewels numbers were strong.

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<v Speaker 1>We also see strong retail sales, strong consumer spending. Unemployment

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<v Speaker 1>insurance claims have been below three hundred thousand per week

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<v Speaker 1>for the last sixty five weeks. That's the longest record

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<v Speaker 1>for the longest streak below three three UM. So there's

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<v Speaker 1>other indicators out there that suggests um that the fundamentals

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<v Speaker 1>of the labor market are still quite strong. Gets it

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<v Speaker 1>is definitely a mixed picture because you've seen a lot

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<v Speaker 1>of weakness in manufacturing numbers. Uh this you know, it

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<v Speaker 1>isn't across the board. If you manufacturing a weak spot,

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<v Speaker 1>a strong dollar, etcetera. Although the services component of this

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<v Speaker 1>job report is troubling because services in a normal month,

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<v Speaker 1>services jobs are up at least hundred and fifty thou

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<v Speaker 1>this latest month, private services up only around seventy thousand,

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<v Speaker 1>so that seems to be troubling. And another thing, the

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<v Speaker 1>hours worked actually pulled back a bit that correlates with GDP.

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<v Speaker 1>That's another sign of perhaps a slowdown. Something hit the

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<v Speaker 1>economy in May. But I take your point, maybe it

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<v Speaker 1>tause it's been so strong now it's slowing down. I

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<v Speaker 1>think that ours work remained flat. It was something that

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<v Speaker 1>I remained flat at thirty four point four hours on

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<v Speaker 1>as the average link of the work week. It was

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<v Speaker 1>that's the same as it was a month ago, which

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<v Speaker 1>is something that I track closely because exactly what you're

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<v Speaker 1>talking about. One thing that you we wouldn't want to

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<v Speaker 1>see is ours declining and a week job jobs numbers

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<v Speaker 1>because that can indicate larger softness. And so the fact

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<v Speaker 1>that ours remained sort of in the band we've been

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<v Speaker 1>seeing in the recovery. UM there's somewhat down from where

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<v Speaker 1>they were a few months ago, but in May had

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<v Speaker 1>bedn't declined further, and so UM actually thought of that

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<v Speaker 1>as an encouraging sign that we, you know, hours held

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<v Speaker 1>on even though the job numbers were some of the

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<v Speaker 1>lok okay hid Thank you so very much for joining

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<v Speaker 1>us chief economists of the Labor Department. Hey, there's a

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<v Speaker 1>red hot sticky out. Turns out that there's a minority

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<v Speaker 1>stake in Lebron's Cleveland clavind leers to be said to

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<v Speaker 1>be for sale. I mean, is that because they lost

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<v Speaker 1>last night to the Golden State Warriors will find out

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<v Speaker 1>this is wimbed radio coming off. On taking stock, Will

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<v Speaker 1>the Federal Reserve race interest rates in June or July

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<v Speaker 1>after these week employment figures for May or will they

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<v Speaker 1>wait until September. That's next on taking stock