Category: Talent Acquisition Strategy

The November Labour Market Report released by the Office for National Statistics which includes the quarter covering July through September 2019 reported that 58,000 jobs were lost as the unemployment rate fell to 3.8%. Nominal wages showed an annual increase of 3.6%.

Notable figures from the September report include:

• The UK employment rate was estimated at 76.0%; 0.5 percentage points higher than a year earlier but 0.1 percentage points lower than last quarter.
• Job vacancies which were measured for the period covering August through October showed a decline of 18,000 openings compared to the quarter that ended in July.
• Estimated annual growth in average weekly earnings for employees was 3.6% for both total pay (including bonuses) and regular pay (excluding bonuses). This is a decrease of .02 percentage points from last month’s report.

Job Losses Continued and the Unemployment Rate Fell

In the third quarter of 2019, the economy shed 58,000 jobs, following the decline of 56,000 positions reported last month. The loss was less severe than analysts had predicted—including a Reuters poll of economists which forecasted a median drop of 94,000 jobs. This was the largest drop since the three months ending in May 2015. The number of females in employment dropped by a notable 93,000. Among the reasons that this is a concerning figure is that women have been a driving force in the UK’s job gains in recent years. One important contributor to this decline are the continuing job losses in the retail sector.

Despite the loss of jobs, the unemployment rate fell to 3.8%. This is the lowest level since 1975, which is before the living memory of much of the nation’s workforce. Annual labour market numbers are still strong. There are 323,000 more people working in the UK than a year earlier. The job losses in the quarter were driven by a decrease of 164,000 part-time jobs which was offset by an impressive gain of 106,000 full-time positions.

In Northern Ireland, unemployment fell to a remarkable low of just 2.5%, a level more likely to be found in high-growth Asian nations than in a developed European economy.

Falling Vacancies, EU Nationals Leaving and Slowing Growth

The drop of 18,000 job vacancies from the previous quarter brought the number of decreased vacancies over the last year to 53,000. This is the fifth consecutive annual fall which suggests a trend of diminishing job openings.

Approximately 131,000 EU nationals left work in the UK over the quarter which is the largest decrease since the Office for National Statistics (ONS) began collecting records 21 years ago. This drop outnumbered the additional 125,000 UK nationals who entered employment.

Annual wage increases slowed to 3.6% which is still well ahead of the rate of inflation. However, if the demand for workers continues to fall, wage growth may continue to stagnate as well.

The nation’s economic growth rate is at its slowest in almost a decade, expanding by just 0.3% in the third quarter. This follows a contraction of 0.2% in the second quarter of 2019. Some economists are citing uncertainty over Brexit for the anemic economic figures:

“Tej Parikh, chief economist at the Institute of Directors, said that ‘a return to growth is welcome news, but narrowly avoiding a recession is nothing to celebrate.

The UK economy has been in stop-start mode all year, with growth punctuated by the various Brexit deadlines,’ he added.”

Everything is Possible

UK employers should look beyond the headlines and view this month’s report in context. Unemployment has not been lower in decades and 800,000 job vacancies are waiting to be filled. The result of next month’s election may or may not result in greater clarity concerning Brexit. It is the continuing lack of clarity over the nation’s economic future that should lead employers to actively seek out expertise in talent recruitment and retention. A partner such as a recruitment process outsourcing company can provide a range of solutions resulting in success in an uncertain environment. And as the novelist Dame Margaret Drabble has written, “when nothing is sure, everything is possible.”

Canada’s unemployment remained at 5.5%. In October, 1,800 jobs were lost. Average weekly wages increased 4.2% over last year. There were strong job gains in the finance, insurance, real estate, rental and leasing sector and significant losses in manufacturing. The number of full-time jobs fell by 16,100, which was barely offset by a gain of 14,300 part-time jobs.

The Numbers

-1,800: The economy lost 1,800 jobs in October.

5.5%: The unemployment rate fell remained at 5.5%.

4.2%: Weekly wages increased 4.2% over the last year.

The Good

Statistics Canada reported that strong wage growth continued in October with average weekly wages growing by 4.2% over the last year. Average annual hourly wages grew by an even stronger 4.3%, the same as in September. On a year-over-year basis, employment in Canada increased by  443,000 or 2.4%, driven by gains in full-time work. During the same period, total hours worked were up 1.3%.

There were 17,800 job gains in the finance, insurance, real estate, rental and leasing sector, suggesting a healthy demand for talent in these important areas of the Canadian economy. The public sector also had a notable increase of 28,700 employees. Older Canadians also experienced an increase in their workforce numbers in October. Employment for people aged 55 and over rose by 31,000, with increases for both men (+17,000) and women (+15,000). The unemployment rate for this age group declined 0.2 percentage points to 4.7%. On an annual basis, employment for this group grew by 187,000 (+4.6%).

Employment increased in British Columbia (+15,300) and Newfoundland and Labrador (+2,700).

The Bad

After gaining of 54,000 jobs in September and 81,000 in August, the Canadian economy lost 1,800 jobs in October. Economists had predicted an increase of nearly 16,000 jobs. Major contributors to the job losses were construction and manufacturing, which fell by 21,300 and 23,100, respectively. Trade uncertainties have a negative impact on manufacturing and continued unease over trade has led some economists to temper their forecasts about Canada’s near-term economic growth.

While the Bank of Canada revised its 2019 Canadian growth projection up to 1.5% from 1.3%, it reduced its 2020 and 2021 forecasts to 1.7% from 1.9% and 1.8% from 2.0%, respectively. This was in part due to weaker foreign demand and trade uncertainty. BMO’s Chief Economist Doug Porter when interviewed stated “it’s pretty clear” the central bank is worried about global trade, adding it “gave a number of hints they would be prepared to move if things deteriorate at all in the months ahead.”

Although New Foundland and Labrador had slight job gains in October, the Maritime Provinces continue to experience unemployment rates that could more commonly be found during periods of recession. Newfoundland and Labrador unemployment stands at a staggering 11.1%, Prince Edward Island at 8.4%, Nova Scotia at 8.0% and New Brunswick at 8.3%.

The Unknown

Statistics Canada reported in October that over 1 million Canadians are holding down more than one job and are working more than 50 hours every week. Canadians working multiple jobs has nearly doubled since 1978, growing quickly in the 1980s, and then rising to 5.7% of all Canadian workers in 2018.

The report found that women, part-time workers and Canadians in their 20s are the most likely to have multiple jobs. It also reported that Canadians who hold more than one job typically work in sectors with strong female participation such as health care and social assistance, and educational services.

A recent Bank of Canada survey found that one-third of Canadians chose to engage in “informal work,” which includes driving for a ride-sharing service, housecleaning and babysitting, due to their need for additional income.

While it is clear that a significant number of Canadians are working long hours and at more than one job, what is less clear is the number of these workers who have searched for new positions with more competitive wages. Finding new employment which provides better income could eliminate the need for informal work and holding more than one job.

The lack of free-time that many of these workers experience may inhibit their ability to conduct a successful job search. The challenge for Canadian employers looking for talent is to attract those who are working multiple jobs that have the skills, or the ability to be trained, and whose income needs can be met by their enterprise’s open positions.

While multiple-job holders may be motivated to pursue new opportunities once they become aware of them, finding the right candidates among them may be a challenge. To reach this group of potentially untapped talent, employers should leverage the experience and expertise of a recruitment process outsourcing company. The result could be the onboarding of hard-working, and grateful, new employees.

Stats NZ released the September Quarterly Labour Market Report which reported that the unemployment rate rose to 4.2% in the third quarter. The September quarter’s jobless rate increased from the June quarter’s which was the lowest since mid-2008. A modest 6,000 jobs were created during the quarter. Annual average wage growth increased to 2.4% which in part reflects the new minimum wage level which came into effect on April 1.

The Numbers

+6,000:  The economy gained 6,000 jobs in the quarter spanning July-September 2019.

4.2%: The unemployment rate rose to 4.2%.

2.4%: Overall wages increased  2.4% over the last year.

The Good

Stats NZ released the September Quarter Labour Market Report which reported that there were healthy wage increases over last year. While overall wages rose by 2.4%, average ordinary time hourly earnings increased by 4.2 percent annually, and both the public and private sectors increased by 3.9%. Job creation, though modest, continued from the last quarter adding 6,000 new positions to the economy. Among the sectors which saw the largest job increases were health and social services which added 20,900 positions, construction with an increase of 6,000 jobs and manufacturing jobs which rose by 4.700.

The labour market seasonally adjusted underutilisation rate fell to 10.4 percent. This is the lowest underutilisation rate since the June 2008 quarter. In addition to those without a job who are are currently seeking work, this figure includes those who are employed part-time and who both want and are available to increase the number of hours they work, those who want a job and are available to work but are not currently looking for a job and potential job seekers who are unavailable to start work but are looking for a job and will be able to start work within the next month. Underutilisation provides a broad gauge of untapped capacity in New Zealand’s labour market. This is the first time since the March 2009 quarter that the number of underutilised New Zealanders has fallen below 300,000.

The Bad

The strong job creation in the June quarter did not continue with the same strength in the September quarter. While this does not necessarily suggest a long-term slowdown in job growth, it was enough to push the unemployment rate up to .03 percentage points to 4.2%.  The participation rate only increased by a nearly imperceptible 0.1%.
 

Some important sectors had significant job losses during the quarter. Professional, scientific, technical, administrative, and support services jobs fell by 15,300; education and training positions decreased by 13,500; and transport, postal and warehousing lost 5,600.

When viewed from a high level, the wage gains reported appear impressive. However in the year until September, 48% of salary and wage earners had received a  wage increase above 2% during the previous 12 months, while 40% reported no annual increase according to ASB (Auckland Savings Bank). In an environment when a small majority are experiencing meaningful pay increases, two out of five New Zealanders have yet to reap any raise in pay. 

The Unknown

The latest IMF (International Monetary Fund) World Economic Outlook predicts that New Zealand’s economy will grow at 2.5% this year and will increase to a growth rate of 2.7% in 2020. These growth predictions are striking because the forecasts for all advanced economies for this year and next is just 1.7%. 

However, many New Zealand economists are skeptical of the IMF’s outlook for Australia. One economist pointed to the most recent NZIER Quarterly Survey of Business Opinion (QSBO), which showed the lowest level of confidence since 2009. An additional concern expressed is that the slowdown in global growth will impact New Zealand’s economy.

One factor that has contributed to the nation’s economic advancement has been the strong rate of population growth due to the high level of migration. New Zealand’s population grew 1.9 percent annually as of June 2018. This growth rate is high compared with the growth rates of 1.6 percent for Australia and 1.2 percent for the global population. Yet due to a slowdown in migration and a migrant exodus, the 2018 figure was down 0.2 percentage points from 2017 when it was 2.1%.

Will New Zealand’s economy and population continue to grow and outpace the expansion of other advanced economies? Regardless of near-term results, employers with a long-term outlook should take into consideration the predictions of strong growth and plan their talent acquisition and retention strategies accordingly. The drop in underutilized New Zealanders in the September quarter which showed a drop in available workers and sustained unemployment rates of under 5% indicates that those enterprises which avail themselves of recruitment expertise in a tight labour market will have the competitive edge in the months and years to come.

The Labor Department released its October Jobs Report which shows that U.S. employers added 128,000 jobs in October, above analyst expectations. The unemployment rate rose to  3.6%, a 0.1% rise above September’s 50-year record low. The rate’s modest rise was caused by more Americans joining the labor force. Year-over-year wage growth also rose 0.1 percentage points to 3.0%. U.S. employers have added to payrolls for 109 straight months, extending the longest continuous jobs expansion on record.

The Numbers

128,000: The economy added 128,000 jobs in October.

3.6%: The unemployment rate rose to 3.6%.

3.0%: Average hourly wages increased at a rate of 3.0% over the last year.

The Good

The better-than-expected job gains were fueled by a number of key sectors in the U.S. economy. Leisure and hospitality added 61,000 jobs, an impressive figure considering that it is still approximately one month ahead of the high-demand holiday season. The healthcare and social services sector increased by 34,200, and business services added 22,000 positions. Even in the midst of the so-called “retail apocalypse,” the retail sector increased by 6,100 jobs and had a 4.4% increase in annual average hourly wages—beating the national average by nearly 50%.

The increase in the unemployment rate, even by the low increment of 0.1%, can be wrongly interpreted as negative news or part of a mixed report. In the case of the October report though, this increase was generated by a rise in the number of Americans joining the labor force which consists of those who are working or currently looking for work. This means that the strong job market has pulled those who have been on the sidelines into actively seeking employment. An increase in the labor force in October is significant because it is presumably not dominated by those newly graduated individuals such as in June or July, or those seeking permanent work after the summer months which would be found in September.

The 3.0% annual average increase in hourly wages is well above the rate of inflation. Major strikes including those at General Motors and by the Chicago Teachers Union may have tempered but did not seriously adversely impact the 109-month long record of U.S. labor market expansion.

The Bad

The General Motors work stoppage did hurt the manufacturing sector as a whole which shed 36,000 jobs in October. This sector is among the most vulnerable to the ongoing trade disputes that the U.S. is currently experiencing with its major trading partners. In fact, those sectors which are the least impacted by foreign trade such as hospitality (especially the restaurant portion) and healthcare were among the leaders in job growth in October. Even with the GM strike settled, trade disputes are continuing and may even intensify in the months to come. This is leading to uncertainty as to when manufacturing will again see an increase in its ranks.

While the job gains in October were welcome news, there is no question that employment growth is slowing down. Job increases have averaged 176,000 jobs per month over the past three months in 2019, which is down from 222,000 during the same period last year. 

The extended period of low unemployment and tight labor market has helped boost wages but not at a rate suggested by past eras of low unemployment, and employers may be using other inducements such as flexible work arrangements and benefits to attract talent as the Wall Street Journal reports:

“Wages last year accelerated to grow at better than a 3% rate from a year earlier for the first time in a decade. Since peaking at a 3.4% increase in February, pay increases have eased somewhat. The gains well outpace inflation but are modest relative to other periods with historically low unemployment. That suggests many businesses are reluctant to boost wages enough to poach workers from competitors. Some may be turning to benefits, such as offering remote work or additional vacation, to attract employees.”

The Unknown

Natural disasters can have short-term negative consequences on the job markets in the locations they impact followed by robust growth driven by the recovery process.  In the case of the wildfires in California, which have become an annual occurrence, the long-term economic effects are not clear. Wide-ranging wildfires have increased and are appearing more regularly throughout the state.

The fires have changed the landscape of entire communities. Power has been regularly cut off as a precaution and as a preventive measure to keep the fires from spreading. Many homes and businesses have become potentially uninsurable, even after rebuilding, as a result of the threat of ongoing wildfires. In October, devastating fires displaced thousands of Californians in geographically diverse parts of the state. California has the largest economy of any state. If it were a sovereign nation, California would have the fifth largest economy in the world, surpassing the United Kingdom. It is unclear whether these conditions will lead to the permanent displacement of a significant number of California’s workforce and their workplaces, and what the effect of this would be on the U.S. economy as a whole. The relentless threat of new infernos and the intensity of the destruction of October’s fires have led some to conclude that it’s the end of California as we know it. The decisions made by residents and employers in light of the ongoing danger will be closely watched in the months to come.

Australia’s economy added 14,700 jobs in September. The unemployment rate fell to 5.2% in September as labour participation slightly decreased. The Bureau of Statistics reports that full-time employment increased by approximately 26,200 and part-time employment decreased by nearly 11,400.

Numbers

14,700: The Australian economy added 14,700 jobs in September.

5.2%: The Australian unemployment rate fell to 5.2%.

66.1%: Labour force participation fell to 66.1%.

0: The Business Confidence Index fell to 0 in the latest NAB release.

Upside

The Australian economy added 14,700 jobs in September. Full-time employment increased by approximately 26,200 while part-time employment decreased by nearly 11,400. This is a positive sign because full-time work adds more wealth to the economy than part-time employment. The unemployment rate fell to 5.2%, the first decrease in seven months.   

In seasonally adjusted terms, the largest increases in employment were recorded in Queensland which was up 25,300 and Victoria which increased by 8,600. Since September 2018, full-time employment increased by 191,700, while part-time employment increased by 119,900.

Downside

While the report was generally viewed as positive, the labour market in September was far from ideal. The unemployment rate is much higher than the Reserve Bank of Australia’s (RBA) aspirational goal of 4.5%. 

Reuters reported that RBA Deputy Governor Guy Debelle cautioned that a downturn in home building had been a “larger drag on the economy and jobs than first expected and was set to get worse before it got better.”

Additional caution was expressed by Marcel Thieliant, an economist at Capital Economics, who said, “The RBA will breathe a sigh of relief after the unemployment rate dipped…But employment surveys point to jobs growth slowing and we expect unemployment to reach 5.5% by early next year.”

The largest job loss was in New South Wales which lost 23,000 positions pushing the unemployment rate up 0.2 percentage points up to 4.5%. And while the unemployment rate fell for the nation as a whole, the jobless rate remains stubbornly high in a number of states: In September the unemployment rate in Western Australia was 5.7%; in Tasmania it was 6.2%; in South Australia it was 6.3%. West Australia had the highest jobless rate with 6.5%, a full 1.3 percentage points higher than the nation as a whole.

Negative Forecasts – How Should Employers React?

The International Monetary Fund’s World Economic Outlook predicts slowing growth in Australia.

In the latest release, the IMF predicts just 1.7% growth in 2019, which is a full percentage point lower than 2018.

At the same time, the National Australia Bank reports that anxiety around the cost of living is increasing for Australians. In September’s Consumer Anxiety Survey, anxiety rose 2.3 points to 64.7.

An article in The Guardian entitled “Did you enjoy the good times? Because the economic outlook for Australia has tanked” paints a bleak picture of the future of the nation’s economy. It points out that in the 12 months leading up to June 2019, Australia’s GDP grew at its slowest rate since 2001.

However, businesses should not overact to the spate of negative economic forecasts.  Australian employers that have the experience and expertise to effectively engage and retain their current workforce will have the competitive advantage in an uncertain talent market in which workers may leave to pursue higher wages.  Organizations that have the best tools for workforce planning and recruitment which support sustainable growth can succeed regardless of the strength of the future economic environment. 

The October Labour Market Report released by the Office for National Statistics, which includes the quarter covering June through August 2019, reported that 56,000 jobs were lost as the unemployment rate rose to 3.9%. Nominal wages showed an annual increase of 3.8%.

Notable figures from the September report include:

• The UK employment rate fell to 75.9%, higher than a year earlier (75.6%) but 0.2 percentage points lower than the previous quarter.
• The number of job vacancies fell to 813,000, the lowest level since autumn 2017.
• Estimated annual growth in average weekly earnings for employees was 3.8% for both total pay (including bonuses) and regular pay (excluding bonuses).

Job Losses and Rising Unemployment

The number of those working in the three months ending in August unexpectedly decreased by 56,000. The decline was driven by those employed part-time and self-employed workers, young people and women. The Office for National Statistics noted that while there were changes in the employment numbers for both men and women, “The number of women entering employment has been a strong contributing factor to the current high employment levels, so a fall in their number in employment has had a larger impact on the current level of employment.”

The number of people who are out of work rose by 22,000 to slightly more than 1.31 million. The decrease in jobs combined with a lack of increased participation drove the unemployment rate up to 3.9%.

The level of those who are economically inactive also rose. Inactivity measures people without a job but who are not classified as unemployed because they have not been actively seeking work within the last four weeks and/or they are unable to start work within the next two weeks. The inactivity rate reported was 21%, 0.2 percentage points lower than a year earlier but 0.1% higher than the last quarter.

The Looming Brexit Deadline…Again

For the third time this year, UK businesses have had to consider their recruitment plans while facing an approaching date for leaving the European Union. And, even though Parliament has voted to constrain the possibility of a no-deal Brexit, there is still no agreement in place with a little over two weeks to go until the October 31 deadline. The job losses and the increased unemployment rate are being blamed on the lack of clarity in the nation’s immediate economic future combined with an extended tight labour market, as Tej Parikh, chief economist at the Institute of Directors, an employer’s group, noted:

“Challenging economic conditions are starting to take the shine off the UK’s job boom. Business leaders’ long-lasting drive to expand their workforce has put the labour market in a strong position. However, firms are now increasingly coming up against uncertainty and the shrinking supply of available talent.”

Even with the uncertainties that would come in the event of a “no deal Brexit,” less than one third of larger UK firms reported that they are planning to reduce their recruitment plans, while a small percentage plan to increase them, according to a recent survey by the British Chambers of Commerce:

“22% of businesses surveyed said they would revise recruitment plans down in the event of no-deal, while 3% would revise up. 73% of respondents did not state that they would revise investment plans.

Larger businesses surveyed (firms with more than 50 employees) were more likely to report that they will revise investment (33%) and recruitment (31%) plans downwards in a ‘no deal’ scenario. 5% of surveyed businesses reported they would revise investment and recruitment upwards, respectively.”

Keep Calm and Consider the Context

While the data released today could be interpreted as the beginning of the end of an expanding labour market, it is far too early to make this prediction. Consider two of the headline factors of today’s report: the employment rate and number of job vacancies. The employment rate fell from last month’s report but this rate of 76.1% was tied for the highest rate on record since records began in 1971. Job openings are slowly decreasing, but the current level of 813,000 still demonstrates robust demand for talent. Unemployment remains near historic lows. And, while news about job losses may be unfamiliar and troubling, employers should not drastically alter their recruitment plans on the basis of a single labour market report.

Statistics Canada reported that the nation’s unemployment fell to 5.5%. In September, 53,700 jobs were created. Average weekly wages increased 3.8% over the last year. There were strong job gains in the healthcare and social assistance sectors. The number of full-time jobs increased by 70,000, while part-time jobs fell by 16,300.

The Numbers

53,700: The economy gained 53,700 jobs in September.
5.5%: The unemployment rate fell to 5.5%.
3.8%: Weekly wages increased 3.8% over the last year.

The Good

Statistics Canada reported that the addition of nearly 54,000 jobs lowered the nation’s unemployment rate to 5.5%. The job gains were due entirely to full-time work. 70,000 new full-time jobs were added, offset by a decrease of 16,300 part-time positions. In the third quarter, employment grew by 111,000, or 0.6%. On a year-over-year basis, employment grew by 456,000, or 2.4%.

The sectors with the largest increases included healthcare and social assistance, which added 30,000 jobs, and accomodations and food services, which increased by 23,300 jobs. The annual average weekly wage increase of 3.8% is well ahead of the rate of inflation, while the annual average hourly wage increase was even higher at 4.3%.

The Bad

Many of the new jobs were concentrated in Ontario, which gained 41,100 new positions, lowering the province’s unemployment rate to 5.3%  With the exception of a slight increase in Nova Scotia the rest of Canada did not experience any notable job growth. 33,000 new jobs were created in the public sector, which is 61% of the total jobs added in September. This reveals a potential weak spot, at least temporarily, in the expansion of private business.

The number of self-employed workers rose by 42,000 in September, continuing an upward trend that began earlier this year. Over the last year, self-employment gains totalled 106,000 (3.7%). The growth in self-employment has two implications that can negatively impact employers and the economy as a whole. First, as more people become self-employed, there are fewer Canadians in the available talent pool for employers to hire, thereby tightening the job market. And, second, the self-employed tend to either not hire others, contract labor on an as-needed basis or employ very few people. For these reasons, the self-employed have a limited impact on job growth.

The Unknown

While much of the economic conditions in Canada appear to be strong, Canadians are growing increasingly anxious about their financial situation. An Ipsos poll conducted for Global News showed that 68% of Canadians feel like they can’t get ahead and 82% say they feel things are becoming less affordable. This poll shows Canadians are divided 50-50 on whether they are better off now than in 2015.

Factors that contribute to the anxiety of many Canadians include that fact the unemployment is still elevated in some provinces. According to Statistics Canada’s September data, in Alberta the unemployment rate stood at 6.6%, in Nova Scotia it was 7.2%, in New Brunswick 8.3% and in Prince Edward Island it was 8.8%.

While wages are increasing, costs of some services essential to millions of Canadians, such as childcare, are increasing faster than the rate of inflation. Canadian employers have no clear way to forecast how their employees will act on their feelings of economic uncertainty. Will some quit to find new work at higher wages? Will others be more likely to remain due to their desire for security and stability? Effective employee engagement and strong communication at every level in an organization are critical components to effectively manage, and retain, valuable talent during this time of perceived economic instability.

The Labor Department released its September Jobs Report which shows that U.S. employers added 136,000 jobs in September, below analyst expectations. The unemployment rate fell to  3.5%, a level not seen since December 1969. Year-over-year wage growth slowed to 2.9%. U.S. employers have added to payrolls for 108 straight months, extending the longest continuous jobs expansion on record.

The Numbers

136,000: The economy added 136,000 jobs in September.

3.5%: The unemployment rate fell to 3.5%.

2.9%: Average hourly wages increased at a rate of 2.9% over the last year.

The Good

The 136,000 new jobs that were added to the nation’s economy kept the labor market on a growth trajectory which has continued for nine years. The headline news was that the unemployment rate plunged to 3.5%, its lowest level in nearly 50 years, a time before the living memory of most of the U.S. workforce.

Average annual wage gains were at 2.9%, and while decreasing from recent months, is still well ahead of inflation. A broad measure of unemployment and underemployment, which includes those too discouraged to look for work, plus Americans stuck in part-time jobs, but who want to work full-time, fell to 6.9% in September from 7.2% in August.

In September, the healthcare sector gained 39,000 jobs, which is in line with the robust increases seen in the last 12 months. Employment in professional and business services continued to trend up in September, adding 34,000 positions. The transportation and warehousing sector also expanded by 15,700 payrolls, shrugging off any major impact by the slow-down in manufacturing. And, at the end of the summer holiday season, jobs in leasure and hospitality increased by 21,000.

The Bad

The rate of job growth continues to slow. Employers have added an average of 161,000 jobs per month through September of 2019. That number is down from average growth of 190,000 jobs per month in the eight years since employment started to pick up after the last recession. The retail sector continued to hemorage jobs, with a loss of 11,400 jobs last month. Since reaching its peak level in January 2017, the retail trade has lost 197,000 positions. 

Manufacturing lost 2,000 jobs in September. Last spring, manufacturers were adding as many as 25,000 jobs a month. In recent months, the average has been a few thousand. There is broad consensus that increased tariffs and the continued trade wars are taking a toll on this sector with few expecting this negative trend to change anytime soon. 

The share of Americans working or searching for work last month held steady at 63.2%. The stagnation in the size of the nation’s workforce combined with a low unemployment rate not seen in nearly half a century could be a troubling sign for employers who are confronted with a shrinking pool of available talent.

The Unknown

While the unemployment rate has plunged, average annual year-over-year wage gains actually decreased in September which has left many economists perplexed. As the Washington Post reports:

“Nick Bunker, an economist at the jobs site Indeed, said that the lower unemployment rate was a good sign but that other economic indicators complicated the picture. Of particular note, he said, was that wage growth slowed from 3.2% to 2.9% in September.”

“You would expect wage growth to be much stronger given this unemployment rate,” he said. Economists have puzzled over why wage growth has remained modest since the recession despite the falling jobless rate.”

Douglas Kruse, an economist at Rutgers University, is cited in the same article and asserted that this situation cannot continue for long:

 “There’s just been a large pool of people out there who are available to be employed without raising wages, but that just can’t keep going on,” Kruse said. “We’re hitting the point where we’re going to have to see wage growth, or employers aren’t going to find workers they need.”

How will employers know whether to increase wages to attract talent and, if so, how much should they be increased? Are comprehensive salary reviews needed to be adjusted with a focus on retention? How do factors such as location and years of experience impact the decision to raise wage levels? Those enterprises that have the expertise to knowledgably answers these and other related questions will have the competitive edge in a potentially  tightening job market in the months to come.