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

Summary
On Friday September 2nd, the Bureau of Labor Statistics (“BLS”) released its monthly summary of labor market activity covering August 2016. The consensus expectation called for job growth to moderate from June and July’s surprisingly strong increases which averaged 273,000 new jobs. The consensus expectation for August’s job growth was in the neighborhood of 180,000 positions as analysts expected the torrid pace to revert to the average for 2016. The official report indicated that August’s growth was even softer, with a pickup of 151,000 net new jobs. The unemployment rate held constant at 4.9 percent, broader measures of unemployment were also unchanged. The growth in average hourly earnings softened slightly to indicate a 2.4 percent improvement over the prior year. Further, the average workweek decreased by a tenth to 34.4 hours. The business sector details indicated that a smaller majority of the industries grew during August as 58 percent were up or steady compared to 62.4 during July. Goods producing or manufacturing industries were notably weak during August. The labor force participation rate was unchanged at 62.8 percent.

Overall, the jobs increase was mildly soft — but at the low end of acceptable — particularly given that revisions to be published during September and October, could push the increase up to the expected level. The absence of change in the unemployment rate was expected and not a sign of weakness. A level labor force participation rate suggests that job seekers have maintained an improved degree of optimism. The most disappointing items in the report are the slowing in wage growth combined with a decline in hours worked. Both changes were ever so slight, so perhaps not meaningful. But in combination, these declines are mildly concerning, and certainly worth following during coming weeks and months. Consumers have been the most important driver of growth in the broader economy. Average hourly earnings and hours worked speak to the consumer’s ability to spend.

On balance, this was not a great report (like June and July), but close enough to what was expected to point to a healthy and still expanding job market that remains on track and consistent with a long but slow economic expansion

Word on the street

In the real world of staffing and employment services, there is a sense that 2016 is growing at a slower pace than the prior two years, and recognition that there was a pause during the second quarter. However, there are indications that activity has picked up more recently and most are consciously optimistic regarding the balance of 2016. There is no sense of an increase in layoffs, rather orders are harder to fill in part because the labor market continues to tighten, particularly for higher skilled workers, but there is also a sense employers are a tad more selective with candidates and more cautious about hiring generally.

The Outlook
Employment growth as well as broader economic growth will continue consistent with an aging expansion and tightening labor market. The domestic economy will accelerate during the second half of 2016 as some of the headwinds subside and corporate profits begin to recover. Employment growth on the other hand will average less than 200,000 positions for the balance of 2016 as the labor market continues to tighten. Don’t expect jobs to grow as fast as they did during 2015. However, job growth will be sufficient, to absorb new entrants into the labor force and maintain a low unemployment rate and ultimately increasing average hourly earnings. The expansion will continue at a slow-ish pace — but we should acknowledge that in exchange for slow growth, we are getting a longer expansion.

Please feel free to contact me if you have any questions or comments.

More about Cornerstone Staffing Solutions
Cornerstone Staffing Solutions is among the top 134 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 Maryland. 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.