The employment report for the month of September that was released last week showed an increase of 156,000 jobs for the month. This compares with an increase of 167,000 for the month of July. The monthly average for 2016 thus far has been 178,000 compared to an average increase of 228,000 in 2015.
Someone looking carefully at these numbers would notice that there has been some slowdown in jobs created, especially when comparing the numbers from last year. This would be expected, as the national unemployment rate is relatively low, currently at 5%.
To account for changes in the population, job growth needs to average an increase of about 100,000 per month to keep the unemployment rate constant. Currently job growth is exceeding that level, which implies that the unemployment rate should still be falling. However, the labor force participation rate has been very low in recent years, so there is the potential for new workers to be added to the labor force in greater amounts without changing the unemployment rate.
Year over year wage growth in the recent report was 2.6%. This number has been rising modestly over the past year, as it had been averaging closer to 2.0% in prior years. Would expect the pace of wage gains to show greater improvement going forward, but the change will likely be gradual.
It should be noted that these figures are just averages. Depending upon what industry someone might be working in, average wage gains could vary from virtually 0 to over 5%.
Likewise, a younger worker should be expecting larger salary increases versus someone who has been in the labor force for many years. A recent college graduate who gets an increase of 5% might think that he/she is doing better than the national average. However, a wage increase of 5% for someone early in their career is not very good, and might imply that person should look elsewhere.
Looking at the economy overall, the services side remains stronger versus manufacturing. Each month the Institute of Supply Management reports a separate survey for manufacturing and for services. For the month of September the survey for services was reasonably strong, while the one for manufacturing was more neutral.
This trend is also confirmed when looking at the breakdown of job growth by industry. For most of this year manufacturing job growth has been around 0, some months positive and other months negative. For September manufacturing employment was slightly negative.
The services side is where the job growth has been occurring. For the month of September the strongest category was Business and Professional Services.
There are some who think that once we get past the uncertainty of the election businesses will be more inclined to hire workers. While this might impact some employers, it is doubtful that there will be any significant change in the monthly job figures in the aftermath of the election. Any changes a new president might propose would likely take a significant time to be enacted, if they do in fact take place.
While the pace of job growth in 2016 has slowed somewhat from last year, it has still remained quite steady. Most likely the current pattern will continue for the balance of this year, and at least until early 2017.
There may be a given month that shows larger job increases than we have experienced the last two, but it is unlikely that job growth will accelerate in a meaningful manner from here. This is because the unemployment rate is relatively low at 5%, and any increase in the labor force will likely be gradual over time.
For now, workers might expect a little better salary increase than they have experienced in recent years. In addition those who are considering changing employers should find the current environment for making a shift somewhat better than it has been in quite some time.
