By Steven R. Drexel, President and CEO of Cornerstone Staffing Solutions, Inc.
As a follow up to Steve Drexel’s Employment Commentary July Employment Commentary, Steve offers some additional intelligence:
Friday’s jobs report is being described as “solid”, “middle of the road” and “in-line” or “slightly below consensus”. On balance, the good news is there were no surprises or major changes in the reported results. Employers added 215,000 jobs (down just a bit from recent months) and the unemployment rate came in at 5.3% (unchanged compared to June and improved from 5.5% in May). The labor force participation rate remained constant at 62.6% suggesting that there is still ample room for jobs and the economy to grow. Average hourly earnings improved by 0.2% during July resulting in a modest 2.1% year-over-year gain, another indication that the expansion while improving, it is not yet close to overheating.
The stock market is down very likely reflecting the expectation that the Federal Reserve Bank will begin, ever so gently, tightening interest rates starting in September. One surprising indication was that the temporary help industry employment contracted during July although up 4.5% compared to last year. Growing industries included education/healthcare, professional and business services. Weaker results were evident in mining, durable manufacturing and leisure/hospitality. Headwinds remain in energy producing and exporting sectors as depressed oil prices and weaker growth in foreign markets persist.
So what should employers expect? Employment is expected to continue to grow adding to the 58 months of sequential increases. However, as the recovery ages, the rate of growth will gradually slow and wages will steadily increase. Likely, around this time next year, the labor market will reach full employment and job shortages will be more acute. The good news – all these changes are measured and moderate so the recovery still has years to run with no recession in sight.”