Commentary by Steve Drexel, Cornerstone Staffing Solutions

The Jobs Report released today (Friday December 4^th) was remarkably close to the consensus expectations as the U.S. economy created 211,000 new jobs and the unemployment rate held steady at 5.0% during the November reporting period.  This is very welcome and reassuring news since it largely dashes the anxiety surrounding a couple of weaker similar reports during August and September. These weaker reports coincided with scary headlines related to weakness in the Asian and European economies that created turmoil in the U.S. as well as foreign financial markets.  Resilience, as demonstrated in the outsized October job growth and now solid November report, is a terrific characteristic.   The U.S. employment market has proven itself to be quite resilient.

Beyond solid job growth, another encouraging result was the improvement in the diffusion index to 60.5 from 59.1 during October and 54.2 during September.  This statistic indicates that the job growth is spreading to a growing number of industries given that in November; slightly over 60% of the industries were growing month-to-month.  Also, labor force participation improved slightly during November, up one tenth of a point to 62.5%.

Two other measures of labor force wellbeing, average hourly earnings and the average workweek, were a little more muted during November.  The average workweek declined one tenth of an hour to 34.5 and average hourly earnings grew by 2.3% — better than trend but less than October’s more encouraging 2.5%.  These measures speak to the consumer’s ability to spend and sustain broader economic growth. There is certainly room for improvement in this section of the report.

Overall, the resumption of stronger jobs growth is very encouraging news.  It suggests that the headwinds evident a few months ago did not derail the economy — and puts forward the notion that 2016 will be another good year to continue the tightening in the labor market and eventually a return to solid wage growth.  It’s not been a fast growing recovery since the great recession during 2008 and 2009, but it has been prolonged and steady – so the cumulative effect is many more working Americans with improving prospects and no recession in sight.