Is Slower Health Care Hiring Here to Stay?

Reposted from 01-16-14 Wells Fargo Securities Special Commentary
Authors: John E. Silvia, Chief Economist, Sarah Watt House, Economist, and Sara Silverman, Economic Analyst

Health care has been a steady source of employment, but recent weakness in jobs data has raised some concern. Job growth in health care likely will be slow in 2014 as budget uncertainty and reforms take hold.

Health Care Employment: Down, but Not Out
December’s surprisingly weak jobs report has raised questions on whether the recent pace of job growth is sustainable in 2014. While we believe the December employment report is not indicative of the overall trend in hiring, job growth in some industries has been slowing recently—most notably in health care (top chart). In December, the health care industry, which has been a steadfast source of employment since the Great Recession, cut 6,000 jobs. The reduction marked the first decline since July 2003, but is part of a broader slowdown in health care hiring. Over the past year, health care firms have added an average of 17,300 jobs per month versus 26,700 jobs per month in 2012.

Growth in hiring has weakened across major types of health care firms over the past year (middle chart). The most sizable drag has come from hospitals, which account for roughly one-third of health care industry employment. Hiring in the hospital sector slowed to 0.2 percent year over year in December, the weakest pace since mid-2010. Hiring at physicians’ offices also has slowed, up only 1.8 percent year over year…MORE

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