Pre-Fourth Preview of June Jobs Report

Published Jul 3, 2024, 6:00 PM

Watch Carol and Tim LIVE every day on YouTube: http://bit.ly/3vTiACF.
Amy Glaser, Senior Vice President at Adecco, shares her outlook for the June US jobs report and employment trends. Bill Pulte, CEO of Pulte Capital, talks about the impact interest rates on housing. Katie Thomas, Head of the Kearney Consumer Institute, discusses consumer sentiment heading into the Independence Day holiday. Hosts: Tim Stenovec and Mike Regan. Producer: Paul Brennan. 

Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg business Week Inside from the reporters and editors who bring you America's most trusted business magazine, plus Gloomal business, finance, and tech news. The Bloomberg Business Week Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio.

I'm Tim Stenebeck, can for Alex Steele. Mike Reagan here from the Bloomberg News crypto team. He's team leader over there. He's in for Paul Sweeney. Or maybe I'm in for Paul, You're in for Alex. It doesn't really matter here.

It's all fungible.

It's all fungible.

Fungible hosts.

That sounds like you're talking about n FT. Hey, something that's not fungible. Is what's going to happen when it comes to employment this week. We're gonna get the June payrolls on Friday, despite the fact that it's a holiday shortened to trading week. One and ninety thousand is what aonomous surveyed by Bloomberg are expecting. It would be a significant decline from the two hundred and seventy two thousand that we saw in May.

That being a.

Big upside surprise. Let's hear what Amy Glazer has to say. She's senior vice president over at a deco. She joins us from ponte Vedra Beach, Florida. Amy, good to have you on with us. Usually you join us on days where we've already heard the numbers, but give us a preview of what you're looking for when it comes to payrolls on Friday.

Yeah, we're looking at another strong month. I don't think it'll be quite as white hot as May, but probably somewhere around the two hundred thousands. We're still seeing employers actively post for opening. Then we're anticipating another solid month.

You know, Amy, I saw an interesting chart the other day that showed the ratio of job openings to the number of people seeking jobs. And you know, the gist of the takeaway of the of the chart was that that ratios back to where it was before the pandemic.

Does that make sense to you?

Is this finally the quote unquote normalation of the labor market after the pandemic? Where is there still work to be done to get back to where we were?

I think we're definitely in our new normal. I anticipate quarter three quarter four more stability in the market, but we're going to remain at about a one to one ratio of openings to job applicants. The real question is can we match on a skills basis?

And what kind of skills are mismatched right now? You know, if I'm a kid graduating from college, what kind of jobs am I looking for in this environment?

Actually, they're the ones that are going to have a great opportunity because professional services, healthcare. We even see technology rebounding in the near future, so college degree opportunities will continue to expand. I think the real skills, the real skills gap that we will continue to see as in manufacturing, skilled trades, and that should be the focus for folks as they're looking for future career paths.

But it should that be the focus for peace people coming out of high school or people coming out of college. It's a big debate that's happening right now, this idea of the quote unquote tool belt generation.

It is the big debate.

And I can tell you somebody who has to write checks for people who come over and you know, trim trees and fixed air conditioners, I can understand why.

Right it's a great opportunity when you're in high school to really decide do you want that career track to move into skilled trades or do you want to take the college track. And it's really an individual decision for for students. Now, I will say oftentimes the career track is much faster. So depending upon as that alpha generation starts coming due in the next couple of years, what's their appetite to sit through years of schooling versus having those more gratifying immediate results.

Amy, what are you expecting as far as wage growth or average hourly earnings as they call it in the monthly jobs report? You know, there has been some cooling from that really strong wage growth that we saw in the last couple of years above the rate of inflation. So there's still is real wage growth, But what is the outlook there? Can we still expect above inflation wage growth going forward?

I think right now will still remain above but not as white hot as it was.

I see continued productions.

In fact, in that space, we see that employees are sticking more at their current companies and focused on stability versus hopping for a dollar or two more at a competitor down the street.

We got the Jolts numbers. It's only yesterday. It seems like a long week, but I feel it fast lasted a month and it's only Wednesday. I'm wondering about the Jolts number. Was it was it sort of a It wasn't It was not fed friendly because it showed that there were actually more openings than expected. Was that? What does that say about what's going to happen on Friday? Does it show that the labor market is not cooling like we thought it was.

I think again it's going to show it's not going to be an explosion. I don't anticipate huge surprises on Friday.

But do you change your view based on the Joeltz figure?

No, not necessarily.

Okay, Aby, you had an interesting point you made in the notes you sent us talking about what you call peak sixty five. When more Americans than ever will turn the age sixty five. What does that mean for the job market?

Over eleven thousand every day in twenty twenty four and beyond for the next three years. It's creating additional gaps in those skills as a lot of institutional knowledge and folks that have those skills depart, so employers are really being tasked with taking some steps now to help offset what's going to be happening with that skills gap. That's creating mentorship programs, investing and learning and development opportunities, and really partnering with their workforce planning to ensure that they've got a plan as more and more Baby boomers retire.

I mean, are how unprepared are we for this b we can please?

About half of the folks I'm talking to right now aren't as concerned with it as I think they should be.

Amy, I'm curious what you think about the so called gig economy. You know, for a few years there, it seemed like so many jobs were being shifted to sort of a contract basis, a freelance basis.

How is that.

Trend playing out in this environment? Is that still the case where so many opportunities are sort of not full time jobs, but gig economy type of jobs.

I think there are those gig like, gig like opportunities, we're switching more to the terminology of flexible scheduling opportunities. We're seeing a strong appetite, especially in gen Z for those flexible part time schedules. We're even seeing it in my generation gen X as we face challenges of dealing with maybe childcare and elder care. So whether or not it's gig and a true contractor or platform, or it's just more flexible scheduling and part time schedules, we will continue to see an increase in that, and they had upcoming years.

I do wonder about what that means, Amy for people in insurance and benefits, because we live in a country and in society where your health insurance and your benefits are tied to your place of employment, and a lot of those flexible gigs don't offer that type of coverage.

I think it's an opportunity for those that do, and you'll off You'll see an offset in wages if that occur. So if somebody is offering benefits for part time work, you may take a trade off in the salary to keep those benefits.

Well.

Good to hear from a fellow gen X or Amy. There's we never we never get to talk much.

I think gen X is like, that's what I'll be. I'll be honest. My favorite generation is it.

Yeah, you're what are you? You're a millennial?

I'm a millennial. Yeah, And I just like you know, gen X doesn't get enough love and hasn't gotten right. And if you kind to, I mean, but if you look around and you see, like, who are the next generation who are running companies right now? Who are the folks who are the decision makers? A lot of them have been a lot of them are Gen X right now. And it's I think it's really interesting.

Yeah, yeah, bound to happen, right, Yeah, bound to day was bound to come?

Yeah. Hey, Amy Glazer, senior vice president at a Deco, joining us here from Florida. That jobs number coming Friday. Of course, here on Bloomberg Radio and Bloomberg TV, we are going to have live coverage of that report when it hits at eight thirty am Wall Street Time the day after the fourth of July.

You're listening to the Bloomberg Business Week podcast. Catch us Live weekday afternoons from two to five pm Eastern Listen on Apple card Play and then brut Auto with a Bloomberg Business at or want just live on YouTube.

Yeah, back with us. Bill Poulty, chief executive officer of Poulton Capital. He joins us from Harbor Springs, Michigan. Bill Poulte knows a thing or two about housing because He is the grandson of the founder and chairman of the home construction and real estate development company Pulti Group market cap of twenty two billion dollars. Bill focusing right now on home services companies that do HVAC, roofing, siding specialties, dry wall, flooring distribution. Pulty Capital is the name of his firm. Bill, good to have you with us, How are you?

Thank you? Good to see you. Yeah, gidnessm too with Pulti Group, although I spent a number of years there.

Pulti Capital is what I meant is what you're working on these days, But you do know the days, yes, yeah, A thing or two about about the housing market and housing in the country, And I'm wondering what you're what you're seeing, and what you're thinking when it comes to mortgage rates right now, which, as Abigail mentioned, are at seven point three seven percent according to the Bank Great thirty Year Index.

She made some great points. You know, when I was on the board of Pulti Homes a few years ago, the interest rates were at two three four percent. Now you have over seven percent. The good news is that the builders have been able to take more market share. The bad news is that a lot of the small homebuilders and affordability have really been hurt. I think you're going to see a situation, guys, where you see a little bit of price softness, but until these old homes start selling again, you're going to see prices stay pretty high. We've seen some resale of homes in Florida, for example, start to take back up again. If that picks up nationally, I think you could see some softest in housing prices. But short of that, I think high prices are here to stay.

You know, Bill, I remember a couple of years ago when inflation really started to pick up, there was a lot of focus on lumber. Lumber prices had really skyrocketed, obviously a big expense line for a home builder. Lumber has come off those sort of really elevated prices. But I wonder if you could just give us a sense of the trends in inflation for all of the labor and commodities that a home builder must buy to build a home. Is there any sign of relief there beyond lumber, or are there's still issues with high prices for the components needed to make a house.

It's a great question. What's interesting about home building, and not a lot of people know this, but the biggest cost of good sold in selling homes is actually the land. And we have a situation where you know, with wood, for example, you can make more wood, or cut more trees, or build more trees. In the case of land, God didn't make you know, infinite land, and so you have a situation where to your point, over the last number of years, the builders have had a lockdown land and because of the restrictions and regulations around zoning, that price is kept pretty high for land. So I don't mean to diminish your point about you know utilities and wood, and you know kitchen appliances, et cetera. But when you look at the grand scheme of things, the land is the biggest piece in terms of cost of good sold for the homebuilders, as it relates to wood in some of these other places. Yes, you've seen softness compared to the dramatic growth that you had a number of years ago, but still inflation remains high, Labor inflation remains high, and so you do have a little bit of upward pressure in the cost of gets sold with the materials partion, not just in the land.

So is that cost of land sort of the main piece of this housing affordability issue in the US.

And is there anything that can be done for that?

Like you said, we can't make any more land, you know, and getting municipalities to change those zoning laws is a tough battle. I assume what could be done either from the federal level, from an investor level to sort of make homes more affordable, especially for these young buyers out looking for their first.

Home, great questions. Zoning has to be fixed. The problem though, and you make a good point, is how do you fix those regulations. You could do things in a national level and you know, ease up on some of the federal standards, but really it's a local level thing. And what we've seen recently, especially with some of the narratives around crime and around new home developments and stuff like that, is people don't want a lot of new home developments necessarily in their backyard. And so you're seeing a lot of these local municipalities not really wanting to build new subdivisions. And so to your point, you know, you can build more wood, you can you know, make more appliances, but if that land is in tight supply relative to that demand, you're going to continue to have those land prices being high. So I think it's a tough problem to solve and I don't see it going away unfortunately anytime soon.

Talk to us a little bit more about Pulti Capital and where you're seeing excitement or where you're deploying money right now. As I mentioned, you do hvac, roofing, siding, windows, doors, a lot of services, specially home builders. What's exciting to you, Well, we.

Spent a number of years, obviously in the Pulti homes business, and when you're a homebuilder, you understand which trades really make or break a home, which trades make more money. And so what we've tried to do is utilize our experience inside and outside of that company to say to ourself, Okay, where can we get businesses for the right price, grow them and then sell them. And so one of the big areas has been and this will come as no surprise to you and other people that follow the private equity market, has been the heating and air conditioning market. We've had three great exits. We've had three great buying build strategies in the HVAC industry. We've sold those to different private equity funds, and so I think that you'll see HVAC continue to take speed. We've also done countertops, kitchen and bath type stuff, et cetera.

Hey, Bill, always good to catch up with you. Happy Fourth of July. Please do come back and visit us again very soon. Right here on Bloomberg Radio, Bill Pulty, CEO at Pulty Capital, joining us from Michigan.

You're listening to the Bloomberg Business Week podcast. Listen live each weekday starting at two pm Eastern on Apple car Play and Android Auto with the Bloomberg Business App. You can also listen live on Amazon Alexa from our flagship New York station. Just say Alexa play Bloomberg eleven thirty.

Hey, it's Tim Stenebed and Mike began in for Alex Steele and Paul Sweeney on this. Well, now we can say it's a quiet Wednesday afternoon because the equity market is closed.

Mike, yees. Yeah, I don't know how we got stuck work and past the close.

Hey, I'll just do what I'm told.

In market time, it's like seven o'clock at.

Night, it really is. And you know, the unfortunate thing for you is crypto is always trading.

Oh, that is very unfortunate and now.

Is crypto team leader. You've got to get kind of fixed. Yeah, you got to get that fixed. Not going to happen. I have bad news for you.

In day.

Unless your name is Satosha, weekends, you're not gonna have any power. Yeah. Hey, speaking of holidays and weekends, we got the fourth of July coming up tomorrow. What's your plan?

Uh?

Probably uh, sleep in, maybe go for a bike ride, nice, some burgers on the grill.

Okay, Burger's on the grill. It's kind of what we're thinking about too in the in the Stenovec household. One thing that is happening though, is consumers are out there and they're choosing where to spend their money and how to spend their money. We got Katie Thomas with us. She's over at the Carney Consumer Institute. She's lead there. She joins us from Pittsburgh, and we like checking in with Katie periodic because she's got a great idea of what the consumer is feeling and how the consumer is spending. Katie, good to have you with us this afternoon. How are you.

I'm doing good, tim I'm counting down the hours myself to when I can wrap it up for the week.

Well, definitely appreciate you taking the time to join us this afternoon at the Carney Consumer Institute. How are you watching holiday spending around the fourth of July.

Yeah, well, you know, we're definitely keeping an eye on a couple things. So one area we are seeing people spend is obviously, like you guys just talked about barbecues. So we tend to find that people like to spend on holidays, whether it's Halloween, Thanksgiving, you know, your big winter holidays. People will make trade offs in their day to day so that they can spend on these big celebrations. Particularly since the pandemic, we are seeing a little bit of thoughtfulness around you know, am I going to spend on the highest quality ground b or am I going to spend on alcohol and making a little bit of you know, financial decisions there. But for the most part, people are excited to spend on the holiday and on their parties and barbecues.

And then another big one of course is travel.

So given the Thursday timing of the holiday and makes for an easy four day weekend, some people already left last weekend and I think in general, unsurprisingly we have had a bit of a resigned consumer lately, so it's been a nice opportunity for people to unplug and unwind. I know, I'm getting emails from the Pittsburgh airport every day saying, arrived three hours early for your flight. So everybody is out and about wanting to travel for the holiday and for the summer.

You know, Katie, I am as a consumer. I like to refer to myself as a frugal consumer.

Maybe others would call me a cheap skate.

I would not call you a cheap skin I would call you where that say, we cut from the same clock, so whatever, any holiday, call you a father to three kids.

They're the ones who called me a cheap ska.

Yeah, frugal consumer is my is my preferred nomenclature. But Katie, whenever there's a holiday coming up, I always wonder there's got to be a sale somewhere, right, is there?

Any Uh? Is July fourth a good time to go bargain hunting?

Yeah?

Absolutely, you know, like I like to call those people thoughtful or savvy consumer. You know, there's only the way, a positive way to spin it. Yeah, So there's there's a lot of great sales to be had this weekend. So you're seeing you know, some of your traditional July fourth sales across the board. Maybe you know a website the whole the whole store is twenty five percent off, things like that. You know, best Buy is having a major sale a lot of those traditional retailers, but they're also ramping up into Amazon Prime sales, so those sort of associated mid July sales.

So you'll have a lot of opportunities.

Across the board to buy, you know, from now kind of through the middle of the month, North STRM anniversary sales, so you can really like, you know, whatever you may be looking for, there should be a deal to be had within the next.

Couple of weeks.

Amazon Prime Day. Amazon is is just off of records, and we saw Bezos sell quite a bit of stock today. Yeah, he's co founder and chairman of the board. He's no longer CEO. We should note Prime Day is going to be happening. I'm getting advertisements when I open the Amazon app right now. How do you watch Prime Day happening for well two days, i should say this year, and like, what are you thinking ahead of it?

So one of the things we're always watching for is Prime Day originally, you know, was part of a way to grow subscriptions, so I think that's still a philosophy they have there, is to bring in a lot of people have prime subscriptions now, so it's not quite as fruitful as it used to be. And it also provides a bit of an edge for some of the retailers having competing sales because you don't necessarily need to have a subscription to shop the sales, which a lot of times will price match. The biggest thing I watch though, is is the items that are on sale and if they seem to be what consumers really want. So sometimes we see it really as an excuse to get rid of excess inventory or other business objectives. You know, during the pandemic, everybody had air fryers on sale because everybody was sitting on a lot of air fryer inventory. So I think, you know, when it comes to prime day, you know they've also done a lot.

Where their own products are on sale, so that's what you're looking for.

Great if not, you know, it may not be quite as lucrative as it once was, but you know, we still find year over year somehow they managed to beat their own records, so we certainly know consumers are shopping them and looking for the best bang for their buck, you.

Know, Katie.

Obviously, inflation has been the top of mind topic for us here at Bloomberg, and when we're analyzing the markets and consumer behavior. It has cooled down from its peak pretty significantly. But I wonder if you could talk to us about how this inflation episode that we just lived through, how a changed behavior consumer behavior, and is there any sort of reversion to normal now that inflation isn't quite as hot as it was a couple of years ago.

You know, Interestingly, lately we're seeing a consumer that's a little bit exhausted of all of the things that they've had to put up with. It tends to be a combination of politics feeding into how they feel about the economy, and so our consumer stress intext it's our take on consumer sentiment. Tim and I have talked about it before our latest version comes out in a couple of weeks, and we're seeing, just like us.

Consumers are still feeling stressed.

And it really is reflected in the politics and finances numbers.

So you have seen.

Consumers though, really make trade off. So it's been you know, it's not necessarily a broad market problem. I mean, when you think of every category, you have winners and losers, right Like, look at Abercrombie as a success story within apparel, whereas some of their competitors are having tougher years.

So consumers are really doing.

This, like both splurge and save mentality seeking.

Value in their day to day.

You know, Walmart's seen a great push as a result of that high value perceptions, but they're also still wanting to live their lives and spend money. And so it's really striking that balance of again, where I'm going to spend, where I'm going to save.

Where are you seeing consumers trade off make trade offs?

I mean, really that's a hard one to answer because it's really individual for consumers. And I think a prime example that we get caught up in generic narratives I think is when you take a look at something like concerts this summer. So for a long time we've been talking about even before the pandemic, Oh, people aren't spending on experiences over things, you know, they want to be out doing things. And in fact, we've had a lot of concerts get canceled low ticket sales, and that shows actually a bit of a myth, the misalignment we're seeing when we generalize consumers as a monolith. Everybody wants to go to concerts, you know, it's for different reasons, right, popularity.

Maybe the arenas were too.

Big, so it lacks the intimacy consumer actually wants all that, you know. So I think, like that's a great example of just trying to boy generalization. But you are seeing one big bright spot, of course is travel. So consumers within the US, around the world, people are still spending on travel.

That's been the top priority.

Like any Taylor Swift concert attendees in your household.

It's funny.

My one daughter actually went to the parking lot of the talk about a cheap skate. She went to the parking lot.

Hey, there's like thirty thousand kids there hanging out on Yeah, that's pretty awesome. Hey that works fun. Yeah, Okay, there we go. That's one way to do it. I like that. I appreciate that we do that at non Brooklyn and the park Slope, Banchell Park, Banshell.

Yeah, Katie.

Back to July fourth, you know, I tend to think of it as this holiday that we can all sort of rally around, you know, there's no religious element to it. But from what I understand, some people actually do boycott July fourth, which.

Was surprising to me to learn that.

Talk to us a little bit about what's going on there and does it sort of have any effect on consumer spend as a result, Yeah, you.

Know, a short answer, because it doesn't tend to have as much of a material effect.

It's a little bit more social commentary.

But what we do see is as a result, particularly a few years ago of ro versus way being overturned, we saw some consumers boycott the holiday sort of in name. I think it was again like a social rallying cry around don't wear red, white and blue, or perhaps we don't really want to support.

The country right now. You know, we're not in.

Agreement with the ideals, so we see talk of that happen. It doesn't necessarily mean even they're not going to go to their family barbecue, right So it is something that's discussed, like perhaps I'm not on board with America right now, But that being said, it doesn't tend to have a huge impact. And the other thing that's offsetting that, frankly right now is the patriotism around the Olympics. So we've seen, you know, just this weekend, Simone Biles Sonny Lee punch their tickets and so that tends to bring out a little bit of our patriotism. So we haven't heard as much chatter about Boycott's this year.

Katie love it when you join us on the program. Thanks so much for taking the time. Katie Thomas is lead at the Carney Consumer Institute, joining us from Pittsburgh, Pennsylvania.

This is the Bloomberg Business Week podcast. Avail little on Apple, Spotify, and anywhere else you get your podcast. Listen live weekday afternoons from two to five pm Eastern on Bloomberg dot com, the iHeartRadio app, tune In, and the Bloomberg Business App. You can also watch us live every weekday on YouTube and always on the Bloomberg Journal alone.

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