BLS Reports Shows Great Jobs Growth
The BLS Report beat the ADP report as it showed 228,000 jobs were added in November. This beat expectations by 28,000. The October report was revised lower by 17,000 and the September report was revised up by 18,000, making the revisions a wash. It’s interesting to see that the final report for September has the economy adding 38,000 jobs because the initial report was a 33,000 decline in jobs. I initially expected that number to not hold and it didn’t. The unemployment rate remained steady at 4.1%. The labor force participation rate was flat at 62.7%. Wage growth was disappointing which I find shocking given how low the unemployment rate is. Average hourly earnings were up 0.2% month over month which missed estimates by a tenth of a percent. The October report was changed to a 0.1% decline. Year over year earnings growth was up 2.5% which was two tenths below the expectations, but two tenths above last month.
The underemployment rate fell from 8.0% to 7.9%, showing further tightening in the slack of the labor market. The manufacturing jobs growth was 31,000 which was up 8,000 from last month. As you can see from the chart below, the year over year manufacturing employment growth has increased since the election. The manufacturing recession ended in 2016 and the sector added momentum in 2017. This chart makes it look like another decline is coming. The change in total employment was 57,000 which was better than the 484,000 decline last month. The jobs growth this year has averaged 174,000 per month which is down 13,000 from last year. That’s a reflection of the tight slack in the labor market because the economy grew much faster in 2017 than 2016. If the economy decelerates next year, there will be an even sharper decline in monthly jobs growth.
The chart below shows a breakdown of the job growth by industry. As you can see, the education and healthcare industry added the most jobs which is exactly what the ADP report showed. The leisure and hospitality segment added 14,000 jobs which is a big decline from last month because last month was impacted by the hurricanes. The fact that this month didn’t see a major dip because of this shows how strong the labor market was in November. The food and services industry added 18,900 new jobs. We’ll review the health of the restaurant industry after we finish discussing the jobs report.
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