By Steven R. Drexel, President and CEO of Cornerstone Staffing Solutions, Inc.

As an Economist and seasoned staffing industry professional, I’m regularly asked to participate in a number of monthly surveys and discussions that predict key elements of the next Bureau of Labor Statistics’ (“BLS”) press release describing The Employment Situation.  The next release revealing November’s statistics will be out on Friday, December 2^rd, (typically the first Friday of each month reporting on the previous month’s activity).

The BLS offers many statistics covering weekly, monthly, quarterly, and yearly data and comparisons.  Insofar as I dive deep into the data (national, industry and company), this commentary shares my thoughts and observations directly related to predicting how November will perform compared to the recent past. Cornerstone’s stakeholders and other interested parties may find the following remarks helpful in assisting with business strategies and objectives for the near term.

What you’ll find in this Commentary:

• October’s results were OK.
• Will November’s report indicate that the labor markets rebounded?
• What do we expect going forward post-election?

October’s solid but uninspiring report. On Friday November 4^th, the Bureau of Labor Statistics released its monthly summary of labor market activity for October 2016.  The headline jobs increase number was an increase of 161,000 jobs, while the unemployment rate declined slightly to 4.9 percent. Economists, who craft their predictions based on a variety of factors, had expected an employment increase of around 180,000, more in line with the 191,000 (revised) increase reported for September. The rate of growth was slower than expected, but not far enough below expectation so as to cause concern.  There is evidence that Hurricane Mathew depressed job growth during October (which could cause a rebound during November).  Year-over-year wage growth hit 2.8%, a welcome result, which is the strongest rate since the expansion began seven years ago.   The average workweek was unchanged.  The unemployment rate declined, however, this was because of a contraction in the labor force as the labor force participation rate dropped a tenth to 62.8.   Of the 262 industries reporting, a larger percentage were growing as this metric improved to 59.2 percent from 57.1 percent during October.  Generally, a net increase of 100,000 jobs is enough to absorb new entrants into the working age population, so the 161,000 increase is more than adequate to sustain the long but slow expansion.

November’s report is likely to accelerate.  I expect Friday’s Employment Situation Report covering November’s activity to indicate that the labor market expanded by 195,000 jobs and the unemployment rate will hold steady at 4.9 percent.  The labor markets are still healthy and growing — but at a slower rate than we saw during 2015 and below the expectations held two or three quarters ago.

Positive employment-related economic indicators during November included the following:

• Initial Jobless Claims as well as Continuing Jobless Claims decreased during November, particularly during the reference weeks from which the Bureau of Labor Statistics draws its survey. These trends are very current and reassuring.
• The Conference Board’s November differential of “jobs plentiful” versus “jobs hard to get” expanded to a net 5.2 during November, up from 3.6 during October.
• The Philadelphia, Richmond, Kansas City and Texas Federal Reserve Survey sub-indexes for Employment and the Average Workweek all were stronger during November as compared to October. Only the New York Empire State Manufacturing Employment Index deteriorated during November.
• The American Staffing Association’s Monthly Index was 1.0 percent improved during November compared to October suggesting that job growth is a bit better than recent trends.
• The private employment surveys that I participate in continued to suggest growth during November at an accelerated pace.

Less than positive employment indicators included the following:

• The Wall Street Journal’s November Economic Survey of 72 leading economists forecast of employment for 2016 was 2.8 percent lower than the October forecast reflecting lower expectations.
• Political uncertainty was higher during November given that it was an election month during a cycle in which the sitting second-term President was prevented from seeking re-election.

Expectations for 2017 and beyond. Uncertainty is the key word with respect to the general economy going forward given the surprising election outcome and the shifting power structure in Washington all which come on top of a long running but slow growth expansion.  Regardless, employment growth remains a critical foundation supporting the continuing expansion.  Wage growth is gradually accelerating which along with increasing employment is central to lift retail sales – another necessary driver of continued growth.  The average workweek has room to improve as does the labor force participation rate suggesting that there is still capacity for growth. And yet, there is a somewhat less momentum going forward as the expansion is aging.  Expect jobs growth during 2017 to average about 180,000 positions per month while the unemployment rate trends down slightly to 4.7 percent by year end.

From an optimistic macroeconomic perspective, President-elect Trump’s policy agenda suggests a pro-business preference featuring fewer regulations, reduced taxes and robust infrastructure spending.  Particularly during 2017 and 2018, these initiatives could spur faster growth.  Conversely, from a risk management perspective reduced taxes and robust infrastructure spending carries the threat of fiscal deficit increases which could suppress growth during 2019 and beyond.  Objectively, it is early, but ultimately, we will need more details and timeframes in order to better forecast the economy during coming years.

In conclusion, I expect that November produced 195,000 net new jobs and a 4.9 percent unemployment rate.  Employment growth slowed during recent months, but remains positive and is expected to continue to grow albeit at slightly slower rates.  The risk of recession remains low and the expansion should continue through 2018.  The cumulative impact of over six years of employment growth results in more severe labor shortages and accelerating wage pressure.  I invite you to call me if you have any questions and share this commentary with your colleagues and professional network.