US Private Sector Jobs Declined in Q2 2024 As Losses Rose

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US Private-Sector Jobs Declined in Q2 2024 As Job Losses Rose

The US private sector lost a net 163,000 jobs in the second quarter of 2024, according to the Bureau of Labor Statistics (BLS).

This decline resulted from a rise in job losses and a slight dip in job gains compared to the previous quarter.

Key Figures from Q2 2024:

  • Gross job losses: 7.8 million (up 639,000 from Q1 2024)
  • Gross job gains: 7.6 million (down 17,000 from Q1 2024)
  • Net employment change: -163,000 jobs

The data highlights ongoing labor market instability, with job losses outpacing gains for the first time in over a year.

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Job Losses Continue to Rise

During Q2 2024, job losses accounted for 5.9% of private-sector employment. The increase was driven by:

  • Contracting businesses: Lost 6.2 million jobs (+448,000 from Q1 2024)
  • Closing businesses: Lost 1.6 million jobs (+191,000 from Q1 2024)

This marks a significant reversal from the previous quarter, where job losses had slowed slightly.

Job Gains Fail to Keep Pace

While new job creation remained strong, it was not enough to offset rising losses:

  • Expanding businesses: Added 6 million jobs (-91,000 from Q1 2024)
  • New businesses (openings): Added 1.6 million jobs (+74,000 from Q1 2024)

Overall, job gains made up 5.8% of private-sector employment, slightly below the loss rate.

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Business Openings vs. Closures

New business openings slightly outpaced closures, but not by a large enough margin to drive net job growth:

  • New business formations: 326,000 establishments (+4,000 from Q1 2024), creating 975,000 jobs.
  • Business closures: Latest available data (Q3 2023) showed 295,000 closed businesses, cutting 927,000 jobs.

Impact by Firm Size

Small businesses were hit hardest:

  • Firms with 1-49 employees: Net job loss of 259,000.
  • Firms with 50-249 employees: Net job gain of 57,000.
  • Firms with 250+ employees: Net job loss of 25,000.

This suggests that smaller businesses are struggling more than mid-sized firms, likely due to economic uncertainty and operational costs.

Industry and State-Level Impact

Job losses were not evenly distributed across industries and states:

  • Industries: 8 of 13 major sectors saw net job losses.
    • Service-providing industries: Lost 79,000 jobs.
    • Goods-producing industries: Lost 84,000 jobs.
  • State-level impact: 30 states, the District of Columbia, and the Virgin Islands experienced higher job losses than gains.

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What’s Next for the Labor Market?

The job market is at a turning point. Rising job losses signal potential economic slowdowns, while job gains remain stable but insufficient. If this trend continues, policymakers may need to consider stimulus measures or support for struggling industries to prevent further declines.

The upcoming quarters will be critical in determining whether the labor market can rebound or if job losses will continue to climb.