Class of 2016 might find work before class of 2015

Class of 2016 might find work before class of 2015

by Jeremy Ryan, Wells Fargo Asset Management

Concerns about upcoming central-bank votes and the British referendum on the European Union roiled markets today, sending European equities tumbling and several government bond yields, notably Germany’s, to record-low levels.

The Dow fell 119 points, with 23 of its 30 components retreating; the S&P 500 Index lost 19; and the Nasdaq slipped 64. Decliners led advancers by about four to one on the NYSE and the Nasdaq. The prices of Treasuries strengthened. Gold futures rose $3.20 to close at $1,275.90 an ounce, and the price of crude oil sank $1.49 to settle at $49.07 a barrel.

For the week, the Dow managed a gain of 0.33%, the S&P 500 Index lost 0.14%, and the Nasdaq dropped 0.98%.

In other business news:

• Yields on German, United Kingdom, and Japanese government bonds hit record lows today as investors grew nervous about a series of important votes in coming weeks, from central-bank decisions in the U.S. and Japan to the upcoming British vote over whether to leave the European Union. Investors seeking safe havens pushed the yield on the German 10-year bund to 0.011% at one point today, near negative territory. European equities were especially hard hit, with Germany’s DAX losing 2.52%, France’s CAC Index slipping 2.24%, Spain’s IBEX 35 sinking 3.18%, and Britain’s FTSE 100 off 1.86%.
• Britain’s vote whether to leave the European Union could affect future European integration efforts, according to comments today by Germany’s finance minister, Wolfgang Schäuble. The minister, an ally of German Prime Chancellor Angela Merkel, said the vote should be taken as a “warning and a wake-up call that we simply can’t go on as before,” even if the vote is narrowly in favor of Britain’s staying in the EU.
• U.S. consumer sentiment weakened slightly in June but stayed at a relatively strong level, according to the University of Michigan’s Consumer Sentiment Index. The index fell from 94.7 the previous month to 94.3. The current conditions index edged slightly higher, helped by wage gains, but that was offset by a drop in the expectations index.
• Shares of Tesla Motors Inc. (TSLA) sank 4.61% after the National Highway Traffic Safety Administration said it was investigating suspensions in the electrical vehicle manufacturer’s Model S sedans. Tesla responded that the issue related to a single car with unusual circumstances.

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Today in first jobs:

• The college graduating class of 2016 has spent the past few weeks soaking up all the solid advice it no doubt received at the various graduation ceremonies across the country. The graduation speakers have any number of qualifications and come from across the cultural and industry spectrums. The one quality they typically lack, sadly, is the one most college graduates seem to need at the moment: how to land a good job right out of college. Come to think of it, that’d be a great speaker idea: a graduate from the prior year who scored a job right away. “So here’s what I did,” the speaker will begin, as the assembled class pulls out notebooks and pens from underneath their robes.

  The good news is that this year is shaping up to be the best year for new college graduates since the Great Recession eight years ago. A new survey of hiring managers by jobs website CareerBuilder.com shows that employers are gearing up to hire more recent college grads, with 37% planning for higher wages than they’d previously paid for entry-level jobs.

  More than half of all new positions for college grads are in information technology (27%) and customer service (26%). The most in-demand majors are English and philosophy. Hold on, I may have been daydreaming again instead of looking at the survey. A closer look indicates the most in-demand majors are, in fact, business, computer and information sciences, engineering, math and statistics, and health professions.

  Overall, employers expect to hire 5.2% more applicants from the class of 2016 than they did from the class of 2015. The members of the class of 2015, meanwhile, are wondering what the heck went wrong. Presumably, the discrepancy between hiring rates is due to the new graduating class of 2016 having to take the senior seminar, “How to scrub your Twitter, Snapchat, and Facebook accounts before you apply for jobs.”

• For many new graduates, their first job out of college will very likely be their first job period. A report from Challenger, Gray & Christmas indicates the number of teenagers getting summer jobs continues to plummet. Only 156,000 16- to 19-year-olds obtained summer jobs in May, down 14% from last year, which itself was down 11% from 2014.

  Part of the problem is there are fewer jobs available for teens. In a mediocre labor market over the past eight years, restaurants and retail jobs have often gone to workers out of their teenaged years. But another aspect is that everyone says paid work builds character, except for the ones who really matter: college admissions officers. A variety of volunteer and unpaid extracurricular activities looks better on college applications than working 40 hours a week slinging burgers.

  For context, Challenger, Gray & Christmas estimate the equivalent number of teenagers working summer jobs in the 1970s was around 800,000, all of whom, when speaking to their own nonworking teenagers, have by now officially said, “Back when I was your age …”