A Strong Jobs Report To Go With A Strong Economy

Strong jobs growth in November means that 2014 is already the best year for jobs growth since 1999.

Now Hiring Sign

The balance of 2014 has been fairly decent when it comes to job creation, but far from spectacular and not entirely indicative of the kind of numbers we’d expect to see given the strong Gross Domestic Product numbers we’ve been seeing over the past years. As of last month’s release of October’s report, for example, we’ve been averaging roughly 222,000 new jobs created per month, with the three month average being slightly higher at roughly 224,000 per month. Additionally, thanks to revisions, each month of the year had shown jobs growth above the 200,000 net new jobs level. While not exactly great, and still under the 225,000-250,000 per month level where it really ought to be for truly healthy jobs growth, these were fairly good numbers and indeed some of the best sustained numbers we’ve seen in the five years of the recovery from the Great Recession. With two quarters in a row of strong G.D.P. growth, though, the question for months now is whether we’d start seeing stronger jobs growth, and more importantly stronger growth in hourly wages and wage growth to go along with the broader economic growth. In November, we may have gotten our first signs that those days are at hand:

Total nonfarm payroll employment increased by 321,000 in November, and the unemployment rate was unchanged at 5.8 percent, the U.S. Bureau of Labor Statistics reported today. Job gains were widespread, led by growth in professional and business services, retail trade, health care, and manufacturing.

In November, the unemployment rate held at 5.8 percent, and the number of unemployed persons was little changed at 9.1 million. Over the year, the unemployment rate and the number of unemployed persons were down by 1.2 percentage points and 1.7 million, respectively. (See table A-1.)

(…)

Total nonfarm payroll employment rose by 321,000 in November, compared with an average monthly gain of 224,000 over the prior 12 months. In November, job growth was widespread, led by gains in professional and business services, retail trade, health care, and manufacturing. (See table B-1.)

Employment in professional and business services increased by 86,000 in November, compared with an average gain of 57,000 per month over the prior 12 months. Within the industry, accounting and bookkeeping services added 16,000 jobs in November. Employment continued to trend up in temporary help services (+23,000), management and technical consulting services (+7,000), computer systems design and related services (+7,000), and architectural and engineering services (+5,000).

Employment in retail trade rose by 50,000 in November, compared with an average gain of 22,000 per month over the prior 12 months. In November, job gains occurred in motor vehicle and parts dealers (+11,000); clothing and accessories stores (+11,000); sporting goods, hobby, book, and music stores (+9,000); and nonstore retailers (+6,000).

Health care added 29,000 jobs over the month. Employment continued to trend up in offices of physicians (+7,000), home health care services (+5,000), outpatient care centers (+4,000), and hospitals (+4,000). Over the past 12 months, employment in health care has increased by 261,000.

In November, manufacturing added 28,000 jobs. Durable goods manufacturers accounted for 17,000 of the increase, with small gains in most of the component industries. Employment in nondurable goods increased by 11,000, with plastics and rubber products (+7,000) accounting for most of the gain. Over the year, manufacturing has added 171,000 jobs, largely in durable goods.

Financial activities added 20,000 jobs in November, with half of the gain in insurance carriers and related activities. Over the past year, insurance has contributed 70,000 jobs to the overall employment gain of 114,000 in financial activities.

Transportation and warehousing employment increased by 17,000 in November, with a gain in couriers and messengers (+5,000). Over the past 12 months, transportation  and warehousing has added 143,000 jobs.

Employment in food services and drinking places continued to trend up in November  (+27,000) and has increased by 321,000 over the year.

Construction employment also continued to trend up in November (+20,000). Employment in  specialty trade contractors rose by 21,000, mostly in the residential component. Over the past 12 months, construction has added 213,000 jobs, with just over half the gain among specialty trade contractors.

There were also healthy revisions for September and October’s jobs numbers, September job growth was revised from +256,000 to +271,000, and October was revised from +214,000 to +243,000. This brings the three month average up to just over 278,000 new jobs. Additionally, the long-term unemployment number number dropped slightly from 11.6 to 11.4% while the Labor Force Participation and Employment rates remaining unchanged at levels that are, it must be remembered, still at some of their lowest levels in the past thirty years. Additionally, and addressing a concern that some analysts have had for months now, things improved on the wage from last month, with both hours worked and the wage growth increasing at healthy paces. This would indicate that there’s at least some room in the labor market for wages to go up notwithstanding the fact that we’re still at the point where the supply of labor is still likely outstripping demand to a large degree thanks to the long-term, lasting, impact of the Great Recession on the labor market. It also suggests that we may start seeing more of those people among the long-term unemployed start to dive back into the labor market as it becomes more apparent that there’s a reason to start looking for work again.

The New York Times labels this a positive report all around:

Employers added 321,000 jobs in November, a very healthy showing that echoes other positive economic data recently and bodes well for the crucial holiday retail season underway.

The unemployment rate remained unchanged from last month at 5.8 percent, the Labor Department said Friday.

Government statisticians also revised upward the number of jobs added in September and October by 44,000, another good sign. Significantly, average hourly earnings surged 0.4 percent in November, twice what economists had been expecting and a sign the healthier economy is finally translating into wage gains for ordinary workers. Over the last 12 months, however, earnings are up only 2.1 percent.

Wall Street had been expecting payrolls to grow by 230,000 in November, with the unemployment rate remaining unchanged. November’s gain was the largest monthly jump in payrolls in nearly three years.

Despite the deep economic frustration many Americans feel, evident in everything from public opinion surveys to water cooler chats to last month’s Congressional elections, the American economy has made significant progress this year. In November 2013, for instance, the unemployment rate was 7 percent, and the jobless rate five years ago this month was 9.9 percent.

Federal Reserve survey of economic conditions across the country released Wednesday reported healthier consumer spending in many regions, likely as a result of lower gas prices, as well as gains in hiring.

Last month, average gasoline prices in the United States fell below $3 a gallon for the first time since 2010, amid a global plunge in crude prices. Crude oil has kept dropping since then, to about $66 a barrel, which suggests prices at the pump have further to drop.

As of Monday, gas prices in the United States averaged $2.77 a gallon, according to the Energy Information Administration, compared with $3.26 in December 2013. If gas prices stay where they are, the typical household will save roughly $600 over the next 12 months.

The overall expansion of the economy, as measured by the annual rate of growth in gross domestic product per quarter, has also been picking up steam.

In late November, the Commerce Department revised upward its estimate of the growth rate in the third quarter to 3.9 percent from an initial figure of 3.5 percent. Output rose at annual rate of 4.6 percent in the second quarter, a snapback from the contraction in the first few months of the year.

As does CNBC, although with some caveats:

Job creation surged in November, with the U.S. economy adding a dazzling 321,000 positions though the unemployment rate held steady at 5.8 percent, according to a government report.
Economists were expecting 230,000 new nonfarm payrolls jobs and unemployment at 5.8 percent. The reported number for October was revised higher to 243,000 jobs. September’s number also was boosted, from 256,000 to 271,000.

Despite the big pickup in hiring, equity traders had little reaction, with futures indicating a modestly higher open on Wall Street, while bond yields rose.

The dramatic move was well above the average of 224,000 a month over the past year.

(…)

Despite the rosy overall numbers, the actual employment level was little changed, with just 4,000 more Americans at work for the month. The total unemployment level rose by 115,000.

Wage growth, closely watched by the Federal Reserve as it mulls an interest rate hike, did pick up some, with average hourly earnings rising 9 cents to $24.66, a 2.1 percent gain.

“You need to take any one month’s data with a large amount of salt,” said David Berson, chief economist at Nationwide. “But it is certainly good news that (wages) went up, even if it is just for the one month.”

Some of the hiring that we saw in November, of course, is likely seasonal holiday hiring, and we’ll likely see more of that when the December report is released in early January. However, that does not appear to be a major part of where the jobs growth this month, or over the long term, is coming from. Instead, it looks as though hiring is finally starting to catach up with the economy itself, which has been going ahead fairly strongly for several months now as measured both by Gross Domestic Product numbers and by other economic statistics. Given the fact that the labor market typically lags behind the economy as a whole, it’s not entirely surprising that it would take some time for hiring to pick up to levels that would seem to match the stronger growth that GDP is showing over the past year. At the same time, though, it is welcome nonetheless. The numbers aren’t perfect, of course. It would be good to see stronger growth combined with a return to better Labor Force Participation Numbers, for example, and hours worked and wage growth are still growing quite slowly, although that last part is likely to remain true as long as labor supply is higher than demand and employers are finding that increased productivity makes the need for immediate additional hiring, or increasing hours or wages, unnecessary.

One group that does appear to be losing out on the jobs boom, though, is millennials:

While hiring is picking up, many of the jobs aren’t high-paying ones. Millennials, in particular, have lost ground, according to a new report from the Young Invincibles, an advocacy group for that generation.

Median annual wages have fallen in nearly all of the most popular industry sectors that employ 25 to 34-year-olds over the past decade.

In retail and wholesale trade, which employs the largest share of these older Millennials, median wages plummeted 15% to $25,000. Wages in the leisure and hospitality industry fell 5% to $18,000. Only healthcare, the second most popular field, saw wages grow, albeit by a paltry 2% to $30,000.

“They are not finding the jobs they need to set them up for their long-term financial future,” said Konrad Mugglestone, co-author of the report.

This is yet another round of bad news for a group of workers that have been hit hard by the Great Recession from the beginning. This is a group of workers that entered the jobs market at precisely the wrong time, either in the midst of the recession itself or just when it was ending and the jobs market was still beginning a long, slow recovery that only now seems to be developing into a strong engine of growth. For many of these workers, that experience came after racking up student loan debt that they had no way to pay off in the beginning without taking lower paying jobs that had little to do with their areas of study, or to seek help from parents or other sources in order to avoid defaults on student loans. Now, and perhaps not surprisingly considering that they’re on the bottom rung of the experience ladder, they find that the good news in the labor market isn’t quite as good for them as it is for workers as a whole. What kind of long term impact this will have on this generation and how they view the economy, government policy, politics, and a whole host of matters, remains to be seen, but to a large degree it seems to be at the root of the many reasons why this particular group tends to be more cynical about such matters than their parents and older generations.

 

Another caveat worth noting is that the years since the end of the recession have followed an odd pattern that have seen economic and job growth for much of the year only to stagnate in the final quarter and the beginning of the following year. In some cases, such as this year’s first quarter, that has been clearly weather related; the “Polar Vortex” winter, for example, was bad enough to send the economy into negative growth for the First Quarter of 2014. The pattern, however, has existed regardless of the weather, and if it continues in 2015 then we may not see the same good news in a couple months that we’re seeing today. Overall, though, there is no denying that today’s report is very good news and, if it’s an indicator of the future, potentially the start of a trend that could help deal with many of the caveats noted above, including the issues faced by millennials. Perhaps most significant fact of all about today’s report, for example, is that it means that 2014 has been the strongest year for job growth since 1999.  To a large degree, those, these are very good numbers that don’t need to be qualified in any real respect. Let’s hope they continue.

FILED UNDER: General
Doug Mataconis
About Doug Mataconis
Doug holds a B.A. in Political Science from Rutgers University and J.D. from George Mason University School of Law. He joined the staff of OTB in May 2010 and contributed a staggering 16,483 posts before his retirement in January 2020.

Comments

  1. anjin-san says:

    Impeach now!

  2. C. Clavin says:

    I blame Obama.

    Funny…the BLS doesn’t even bothering to mention Government hiring this go-round.
    The economy continues to recover…and apparently pick up steam…in spite of Republican efforts at sabotage.

  3. C. Clavin says:

    Be sure to look at Health Care and Insurance hiring.

    Health care added 29,000 jobs over the month. Employment continued to trend up in
    offices of physicians (+7,000), home health care services (+5,000), outpatient care
    centers (+4,000), and hospitals (+4,000). Over the past 12 months, employment in
    health care has increased by 261,000.
    Financial activities added 20,000 jobs in November, with half of the gain in insurance
    carriers and related activities. Over the past year, insurance has contributed 70,000
    jobs to the overall employment gain of 114,000 in financial activities.

    And Republicans said Obamacare was going to destroy those industries.
    Doh…wrong again.

  4. CB says:

    See what happens when you elect Republicans to Congress??

  5. al-Ameda says:

    Perhaps most significant fact of all about today’s report, for example, is that it means that 2014 has been the strongest year for job growth since 1999. To a large degree, those, these are very good numbers that don’t need to be qualified in any real respect. Let’s hope they continue.

    File this story under “What else is new?”
    These type of slow and steady jobs and economic growth numbers have generally been the case since the Great Recession bottomed out in 2009, however half the country willfully ignores the empirical evidence and continues to claim that Obama’s economic policies have made our economy worse off.

  6. humanoid.panda says:

    @al-Ameda: The most important thing about the recovery is how long it had been so far: 50 months of continuous job growth, with no signs of it stopping so far! There is an optimistic read on that: we strayed so much below potential, that the regular mechanisms that trigger recessions will take years to activate. The negative read is that at some point we will have a recession, and wages have not recovered at all, and will be thrown back further in that recession.

  7. al-Ameda says:

    @humanoid.panda:

    The negative read is that at some point we will have a recession, and wages have not recovered at all, and will be thrown back further in that recession.

    I agree with you on that.
    The wage trends have been unfavorable for many years now, and statistically, the middle class has realized a disproportionately smaller gain form successive rounds of economic growth over the past few decades.

    As far as the Republican base is concerned we’re still in a recession, they do not care about the facts.

  8. humanoid.panda says:

    @al-Ameda: There had been some hints in this jobs report that wages are finally budging (grew at 4.5% annualized rate). If this holds, its really good news, with a dash of bad ones. On the one hand, people will see real improvement. On the other, this means the next recession will be arriving at sometime in the next 2-3 years..

  9. JohnMcC says:

    Related: “CBO now estimates…the budget deficit in FY 2014 will be $492Billion…(which is) 2.8% of GDP…the fifth consecutive year in which the deficit has declined since peaking at 9.8% in 2009.”

    http://www.cbo.gov/publication/45229

  10. C. Clavin says:

    @humanoid.panda:
    After 58 or so straight months of private sector job growth a recession is pretty much inevitable in the next 2-3 years. The real questions are:
    ~ how deep it goes
    ~ is it structural or cyclical?
    ~ will we again foolishly pursue austerity when it does happen?

  11. grumpy realist says:

    OT, but Doug, have you noticed the implosion of TNR?

    I cannot do better than to quote from the analysis over at Balloon Juice:

    The thing [TNR] survived two world wars, the Great Depression, Watergate, the fall of the Soviet Union, 9/11, New Coke, and 74,927 episodes of Law and Order, but couldn’t handle one Silicon Valley douchebag with a giant checkbook in possession of all the common sense of a chunk of asphalt.

  12. grumpy realist says:

    Oh, and getting back on track–I’ve noticed more nibbles from headhunters. Not that what they’re digging up for me is all that amusing. Quite a number of law firms trying to swap out patent attorneys for patent agents because we’re incredibly much cheaper. The fact that you’re going to have to pay me inconvenience $$$ to get me to move out of Chicago never crosses their tiny little minds….

  13. MikeSJ says:

    grumpy realist says:

    …one Silicon Valley douchebag…

    I think this can be seen as a good example of a redundant phrase.

  14. Nikki says:

    Good luck, SCOTUS, in killing the recovery when you decide to kill Obamacare.

  15. stonetools says:

    See what happens when you elect Republicans to Congress??

    Sigh. You say this tongue in cheek… but this is exactly how conservatives will spin it. They’ll talk about how “business confidence recovered in anticipation of the Republican takeover of the Senate,” etc. and Fox News will blast this message out 24/7 with no pushback from the Democrats, who spent the last year running away from Administration policy.
    What’s happening, of course, is that an underpowered recovery, sabotaged by Republican austerity policy, strengthened just a little bit too late to help the Democrats in 2014.Had these figures arrived just a few months ago, which they would have-absent, say, the sequester or the government shutdown-the Democrats would have done a lot better. As it is, they’ll probably help the Republicans, who did everything they could to sabotage the recovery.
    Frankly, it serves the Democrats right. From their refusal to push for a bigger stimulus in 2009, to their not asking for more stimulus in 2010, to their acquiescing in the turn to austerity in 2011, and running away from the President in 2014, the list of errors and just straight up cowardice is long.
    Looming over everything is the Administration’s total failure in messaging on economic policy. Instead of advocating for a robust liberalism from the beginning, and calling out the Republicans on their ruinous economic policy mistakes, the Administration settled for a mealy-mouthed “conservatives have good ideas too” approach. They also pursued “reasonable bipartisan compromise” with a religious zeal, despite ferocious opposition from a Republican Party that was at war with the Administration from day one.
    The result is an administration unable to reap the rewards of a largely successful economic policy, and crippled by its failure to articulate a consistent message on economic policy(or indeed, any other area of policy).

  16. humanoid.panda says:

    @stonetools: The bright side of this is of course, people have only the vaguest understanding who controls Congress and the details of economic policy. Democrats were not punished in 08 for the crisis, and if the recovery continues (inshallah), Obama, not the GOP will get the credit. In fact, it will be rather ironic if the GOP sabotage will have delayed the recovery just enough to push Hillary over the top in 2 years…

  17. stonetools says:

    Meanwhile, in a development passed over in silence on this website, half a million people have signed up for the ACA in a smooth second year rollout.

    More than 460,000 people enrolled in a private health insurance plan on the federally run Obamacare exchanges in 37 states during the first week of the sign-up period for 2015 coverage, the Department of Health and Human Services announced Wednesday.

    These enrollments are almost evenly split between renewals of existing customers and new sign-ups, according to a report issued by the department. More than 1 million people have submitted applications for financial assistance and coverage and almost 1.6 million have reviewed prices for insurance using HealthCare.gov’s window-shopping feature between Nov. 15, the opening day of the three-month health insurance exchange enrollment period, and Nov. 21, the department disclosed.

    President Barack Obama’s administration aims to sign up more than 9 million people for private health insurance via these exchange marketplaces by the close of the enrollment period on Feb. 15, including renewing most of the approximately 7 million people who already have insurance policies obtained through the federally operated exchanges and those run by 13 states and the District of Columbia.

    So the ACA is quietly becoming a major success. Of course, you would never know that from Administration communications. The Administration’s inept messaging continues.

  18. anjin-san says:

    Shall we get out magnifying glasses out and try to find this story on the foxnews.com homepage?

  19. michael reynolds says:

    @stonetools:

    The single dumbest thing about Barack Hussein Obama is that he seems to think it’s enough to be right. It is not enough to be right. We don’t live in that era anymore. We live in the era of hype and end-zone victory dances. Things need to be shoved in people’s faces again and again and again with an absolute lack of subtlety.