What is the Forecast for Job Creation in 2019?
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What is the Forecast for Job Creation in 2019?
According to a March publication of the Bureau of Labor Statistics' TED: The Economics Daily, the February employment report did not report a lot of jobs for the U.S. economy. Based on the report and averaging all sectors, only 20,000 jobs were gained during February 2019.
Looking deeper at the individual sectors, the picture is more varied. "Professional and business services gained " 42,000 jobs during February. Similarly, "wholesale trade employment" maintained it's positive gains of 11,000 jobs during the same time-frame. However, the construction industry saw a loss of 31,000 jobs during February, despite gaining 53,000 jobs during in January 2019. Other sectors, such as retail, mining and the government, saw limited movement in job gains or losses. This is comparable to manufacturing's small gain of 4,000 jobs during the February time-frame.
Domestic Production Considerations
Looking at how tariffs have impacted employment, the Economic Policy Institute (EPI) provides insight as to how much the global economy has impacted U.S. aluminum production. From 2010 to 2017, 23 working aluminum smelters dropped to five. This set of closures resulted in the disappearance of 13,000 jobs. Similarly, 2017 saw only one alumina refinery operating, down from three in 2016.
During the investigation by the U.S. Department of Commerce and the Executive branch into whether aluminum imports were a national security threat, global economic forces were putting the squeeze on domestic production. From 2000 to 2017, China's primary aluminum production capacity grew 1,500 percent, while accounting for 82 percent of additional global aluminum production.
Along with smelters in India and the Persian Gulf, Chinese producers also received government subsidies. By ex-US producers lowering the London Metal Exchange (LME) price for aluminum to unprofitable levels, coupled with China's aluminum production expanding during the same time, 18 American smelters shuttered and 13,000 positions were eliminated from the industry.
Mixed Outlook Based Upon Tariffs
Michael Sposi and Kelvinder Virdi, research analysts with the Federal Reserve Bank of Dallas, looked at how tariffs will impact both producers and consumers of steel and aluminum. 2016 statistics revealed that approximately 300,000 people (two-tenths of one percent of all workers in America) work in both businesses. It’s important to note the March 2018 tariffs on steel and aluminum are not applicable under existing NAFTA agreements.
The two analysts explain that it's important to consider ways steel and aluminum are critical to other segments of the economy (construction, car producers, machinists, etc.). Tariffs are projected to reduce the nation's overall gross domestic product by as much as one-quarter of one-percent. This is due to fewer items produced and sold to ex-U.S. markets because of the increased material costs.
Virdi and Sposi note there's a projected five percent reduction in imports. This is coupled with higher-cost domestically produced metals, estimated to cost 21 percent more than pre-tariff prices for imported steel and aluminum.
Their report, titled “Steeling the U.S. Economy for the Impacts of Tariffs,” found that the "machines and equipment sector,” which uses the most metal, would experience an increase in input costs. This pressure would reduce competitiveness against international competitors and lower demand throughout America, reducing industry-wide production by 2.66 percent, along with a 2.63 percent drop in exports. However, it’s noteworthy to see how tariffs can also stimulate employment.
As part of the U.S. Commerce Department's Section 232 investigation to see if importation of steel and aluminum can negatively impact national security, the resulting imposition of tariffs on imported steel and aluminum have led American producers to hire more workers. By increasing domestic aluminum production by a half-million tons annually by the end of 2018, it has been projected to inject $100 million of capital expenditure and create 1,000 new positions. Between reopening facilities and additional production, 300 jobs were generated from February to October 2018 alone, and up to 3,000 going forward.
While there’s no certain projection for the rest of 2019’s employment picture, what happens on the international trade stage will undoubtedly have a lasting impact on domestic employment.
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