Employers Generating Jobs at Strong Pace

By Toni Vranjes

October 3, 2014

The latest government jobs report shows strong employment growth, with payrolls up by a whopping 248,000.

In September, job growth topped economists’ predictions. The consensus estimate for payrolls was 213,000, according to IHS Global Insight.

“This report is a relief following the disappointing August figures,” said Sophia Koropeckyj, managing director of Moody’s Analytics.

down_arrow_5_pt_9Also, the nation’s jobless rate fell from 6.1 percent to 5.9 percent, reaching the lowest level in six years. Meanwhile, the labor force shrank by 97,000, but this decline isn’t statistically different from no change in the size of the labor force, noted Tara Sinclair, chief economist at Indeed.com.

Another positive development: employment growth for July and August combined was revised upward by 69,000. The Labor Department revised the payroll figure from 212,000 to 243,000 for July, and from 142,000 to 180,000 for August.

“I think overall this was a good jobs report – the unemployment rate fell for generally good reasons and payrolls solidly beat expectations,” Sinclair said in an e-mail. “In addition, the previous two months were revised upwards, so end of summer employment looks better than initially thought.”

Last month, the professional and business services industry performed especially well, creating 81,000 jobs. Another strong performer was retail trade, with employment growth of 35,000. One factor that boosted retail trade was the return of New England grocery-store workers to their jobs, following worker protests earlier in the year.

Nevertheless, there are some areas of concern. In an analysis, IHS Chief U.S. Economist Doug Handler wrote that the labor force has increased by just 389,000 since September 2013.

Handler and Sinclair say that low wage growth seems to be discouraging people from returning to the labor force. In September, average hourly earnings declined by one cent.

“With the one penny decline in average hourly earnings, average hourly earnings stand at only 2.0 percent ahead of year-ago levels – a rate that persisted since 2011,” Handler wrote. “Large declines in the unemployment rate for those without a high school diploma and among high school graduates suggests that a sizable share of this month’s new jobs occurred in low-paying sectors, depressing growth in average hourly earnings.”

Sinclair observed: “Employers may need to start raising wages to attract non-participants back into the labor force. Hopefully the strong numbers on job creation indicate to people who have given up looking for work that now might be the time to start looking again.”

In Koropeckyj’s view, the declining labor-force participation is a major worry – but it’s unclear if low wage growth is keeping people away.

Tags: , , ,

Leave a Reply