Employment Growth Staggers
In our recent conversations with business contacts and community leaders throughout the Sixth District, we detected very little movement on employment. Recent data on regional employment have been disappointing as well. The Sixth District as a whole shed a net 11,100 jobs in June, following a small gain of 7,700 in May. Data for July will be released on August 17.
The decline in Tennessee's total payroll employment was largely a result of a 15,300 decline in government employment. Large declines in June government employment have been recorded in previous years as well in Tennessee, so taking this trend into account, the overall reading for the region was not as negative. Nonetheless, job growth remains anemic in the Sixth District.
The District unemployment rate, which is an aggregate of the six states in our region, rose to 8.5 percent in June from 8.3 percent in May. With the exception of Florida, where unemployment held steady at 8.6 percent, all states in the region reported increases in the unemployment rate over the previous month. We seem to be going in the wrong direction.
The national employment report for July, released on August 3, showed an increase of 163,000 over June—much better than the sub-100,000 increases logged in the previous three months. We hope that July data will show growth returning to regional employment.
Such a report would be a welcome surprise, given what our business contacts shared with us over the past several weeks. Information gathered by our Regional Executives confirmed that current economic activity had slowed and that the outlook had deteriorated for the second half of the year. The cautious optimism we detected in the early summer has given way to a degree of resignation that economic activity may not improve much in the months ahead. The resulting low level of expected growth is resulting in much more modest hiring plans.
That said, business contacts did not share plans to make significant cuts to their workforce. Most contacts said they are planning to continue operating on the assumption that demand for their goods and services will continue, but they also don't assume rapid growth in demand in the near term.
By Mike Chriszt, a vice president in the Atlanta Fed's research department
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