by Steven R. Drexel, CEO, Cornerstone Staffing Solutions

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 September’s statistics will be out on Friday, October 2^nd., (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 August 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.

In this Commentary, I address the following:

• Some final observations regarding August’s employment release
• Expectations regarding September’s employment situation
• Some comments about the broader economic backdrop

First a few words about the August release. I expected August to generate 200,000 new jobs and a 5.3% unemployment rate. In the published report, the labor market’s growth was slower than expected, as payrolls expanded by 173,000 jobs while the unemployment rate improved, by a better than expected, two tenths to 5.1%.  Another area that improved (offsetting the weaker job growth) was average hourly earnings. Additionally, measures of hours worked improved. So on balance, the report didn’t exactly follow expectations, but it indicated that the employment picture remained healthy despite the headwind issues that emerged during August, namely slowing growth in China and the related volatility in the domestic and international financial markets.

What should we expect for September? I expect Friday’s Employment Situation Report covering September’s activity to indicate that the labor market expanded by 185,000 jobs and the unemployment rate held steady at 5.1%.  While I’m expecting more job growth in September than was initially reported for August, I view this as a “flat performance” since August’s estimate is likely to be revised higher.   Essentially August and September, while solid, will likely come in below the recent trend rates of growth.

Positive employment indicators during September included Initial Jobless Claims which remained quite low during September; Initial Jobless Claims were flat when comparing September to August after adjusting for Labor Day, which coincided with the reference reporting period. The Conference Board’s Consumer Confidence Index, reported labor market improvement as the differential between “jobs plentiful” and “jobs hard to get”, improved from a revised 0.4 in August to 0.8 during September – these two positive readings indicate that consumers are more optimistic than pessimistic for the first time in seven years.  The Challenger Layoff Report was up a bit in September but the readings remain low from a historical perspective and concentrated in a limited number of industries. The American Staffing Association’ Index was 1.5% improved during September compared to August.

Negative employment indicators during September included the Purchasing Manager’s Manufacturing Employment Index which declined to 50.5 in September from the previous month’s 51.2, reflecting less inventory building and weakened offshore demand.  Also, the Intuit Small Business Employment Index declined modestly again during September (the first reports of declines in four years).

The private employment surveys that I participate in have been notably optimistic regarding employment in general and particularly during September (even with signs that the broader economy is slowing).

Some comments about the broader economy. The consensus among forecasters supports the belief that the economy is slowing slightly in response to weaker global growth and a stronger dollar, both of these developments tend to depress exports.  Additionally, the slowing energy sector is a drag on growth as is the likelihood of Federal Reserve action to move off its zero interest rate policy.  Still these impacts are modest with the economy tracking along at a 2.0% to 2.3% annual growth rate.  This growth rate is consistent with continued solid employment growth and a gradually declining unemployment rate.  Basically, the U.S. economy, despite challenges, is hale and hearty with solid demand and low inflation giving rise to the belief that we can weather the storm and continue to grow — albeit at a slightly slower rate in the near term.

In conclusion, I expect September to produce 185,000 new jobs and a 5.1% unemployment rate.  There are signs that the economy is slowing slightly but employment is a resilient, bright spot benefiting from building steady momentum during the last few quarters.  Expect labor markets to gradually tighten with progressively increasing wage pressure this year and next.  It’s been over a month since the concern surrounding developments in China and the financial market have emerged.  So far the U.S. economy has withstood the storm and anxiety is easing.  Expect continued pressure on wage rates in response to increasingly evident skill shortages.  I invite you to call me if you have any questions and share this commentary with your colleagues and professional network.

More about Cornerstone Staffing Solutions

Cornerstone Staffing Solutions is among the top 120 largest staffing firms in America, as ranked by Staffing Industry Analysts. Since 2003, Cornerstone has grown from a neighborhood staffing provider to a $100 million national firm that employs thousands of people at hundreds of companies from California to Connecticut. Providing candidate searching and job placement for administrative, industrial, technical, sales and transportation positions, Cornerstone truly is where talent and jobs meet. Visit us at: www.cornerstone-staffing.com.