Defying economists’ predictions and concerns over a global slowdown, United States employers added a surprisingly high number of 266,000 jobs in November, according to the Bureau of Labor Statistics.
This represents a 50-year low for unemployment at 3.5%. The Department of Labor’s November jobs report marks 110 consecutive months of job gains. Wages and salaries rose by 3.1%, the biggest increase in a decade. The amount of jobs gained in September and October were revised upward by 41,000. These numbers are a relief to many who felt that the economy may be running out of steam and heading toward a recession.
Stephen Stanley, the chief economist of investment bank Amherst Pierpont said, “It’s a significant surprise because economists were ready to go with the idea that payroll growth was slowing down because the job market had gotten tight.” Stanley added, “The whole tenor has changed in terms of job growth. We’re back at steady-as-she-goes at a robust pace.”
The end of the long General Motors (GM) strike boosted employment in the automotive and related sectors. Job increases were spread throughout the U.S. Health, leisure and hospitality, and professional and business services saw big gains in employment. “This firmly helps put fears of recession in the rear-view mirror,” said State Street Global Advisors Chief Investment Strategist Michael Arone.
However, there were some soft spots. Retail added just 2,000 jobs and construction only 1,000. This could be attributed to the tight job market in this space and the challenges employers are having finding and hiring people.
Steve Rick, chief economist at CUNA Mutual Group, voiced some concerns about the future, “Still, while these recent jobs reports have been a source of optimism, the economy’s long-term outlook remains murky. The broader labor trend is still lurking up on wage growth, tariffs have been squeezing business outlooks and consumer confidence has lowered over the past few months.”
A new job-measuring metric, the U.S. Private Sector Job Quality Index (JQI), was recently created by a group of organizations and researchers, including Cornell University. The JQI tracks the quality and pay of jobs. The impetus for this new index was based upon the researchers’ findings that a significant amount of jobs created over the last decades were of low quality. This means, in part, that the pay is lower and hours worked are less than jobs held in the past.
This is the first time the JQI was used. The research reported that out of the 254,000 private sector jobs added in November, 47.76% were in low quality sectors. Researchers claim that the numbers would have been much higher had it not been for the GM workers returning to work.
This index may prove useful as a counterbalance to the prevailing sentiment about the job market. They claim that while the numbers of new jobs are high, the quality and pay are low.
These numbers buttress the argument of skeptics who contend that the monthly government reports do not accurately depict the real job market.